On April 30, the U.S. Department of Education (ED) announced that it had finalized its rule implementing statutory directives from the One Big Beautiful Bill Act, enacted in July 2025 (covered by InfoBytes here). The rule largely adopts the January 30 proposed rule (covered here) without substantive modification, following the receipt of more than 80,000 public comments. Most provisions take effect July 1, with provisions related to rehabilitation, deferment, and forbearance effective July 1, 2027, and the sunsetting of certain repayment plans effective July 1, 2028.

Among the limited substantive revisions from the proposal, the final rule: (i) introduces a new provision enabling the secretary to create a single combined application for loan rehabilitation and enrollment in an income-driven repayment (IDR) plan, such that borrowers who successfully rehabilitate a defaulted Direct Loan on or after July 1 may be automatically transitioned into an IDR plan; (ii) expands the methodology for calculating rehabilitation payments so that the secretary may determine the reasonable and affordable amount based on any eligible IDR plan, not just income-based repayment (IBR) as proposed; (iii) clarifies that payments made under the Repayment Assistance Plan (RAP) do not count toward forgiveness under an IBR or other income-contingent repayment plan; (iv) adds new regulatory text clarifying how less-than-full-time disbursement reductions apply in subscription-based programs; (v) revises the RAP to establish the $10 minimum monthly payment for all payment calculations consistent with statutory requirements; and (vi) revises RAP prepayment and matching-payment rules to allow borrowers who make excess payments to opt out of advancing their due date, thereby preserving eligibility for the plan’s interest subsidy and matching principal payment.