That’s right, it may be even harder to qualify for deferments and forbearances under the federal student loan program thanks to changes introduced in the One Big Beautiful Bill Act (OBBBA). Student loan protections will be more restricted, and depending on when you borrowed your loans, certain options will no longer be available to you.
What’s Changing
You may have already heard about some of the more widely publicized changes to the student loan program: lower loan limits and restrictions on repayment plans. But OBBBA will also eliminate deferments and forbearances. The safety nets that many students and parents have come to expect will no longer be available based on when you borrow your first loan(s).
When Will This Go into Effect
Here are the dates you need to pay attention to:
- July 1, 2026 - Changes to loan limits and repayment plans take effect
- July 1, 2027 – Unemployment and economic hardship deferments are eliminated for any borrowers whose first loan originated on/after July 1, 2027. On top of this, forbearance time will be reduced.
Unemployment Deferment
The unemployment deferment is a unique program for borrowers who are either receiving unemployment benefits or are unable to find full-time employment. (This includes individuals working less than 30 hours per week.)
For anyone with loans made before July 1, 2027, congratulations. You can still use this benefit.
Lose your job in 2028 with post July-2027 loans? Sorry. You’ll need to leverage forbearance instead. And beware…forbearance has more limitations.
Economic Hardship Deferment
For people facing an extreme financial challenge, the economic hardship deferment is designed to provide temporary assistance. Like the unemployment benefit, the economic hardship deferment is being eliminated starting July 1, 2027. If you have existing loans prior to this date, nothing will change for you.
However, if your first loan(s) are borrowed on/after this date, you will no longer have access to this deferment.
Forbearance
A forbearance is similar to deferment where it allows you to temporarily postpone payments on your loans. But the criteria for qualifying are broader and approval is at the discretion of your loan servicer. For example, you could request forbearance due to illness, financial hardship, a national emergency, personal challenges, etc.
With the passage of OBBB, forbearance has a newly reduced time limit starting July 1, 2027. Forbearance will be granted for up to 9 months in total within any given 2-year period. Prior to July 2027, forbearance could be used for 12 months at a time for up to 3 years total.
The Bottom Line - What You Should Know
Here’s a quick side-by-side to help you keep track of these changes.
| If you have existing loans (Pre July 1, 2027) | If you are a new borrower (On/After July 1, 2027) |
|---|---|
| Your current deferments and forbearance are still protected* | No unemployment deferment |
| You still qualify for unemployment and economic hardship deferment | No economic hardship deferment |
| Forbearance is up to 12 months at a time for a lifetime total of 3 years | Restricted forbearance (up to 9 months within a 24-month period) |
* When your pre-July 2027 loans are paid in full, these options will no longer exist. Your loans will not be grandfathered and any new loans you borrow (for example, grad school) will not qualify for unemployment or economic hardship deferment.
Is There an Alternative?
You do have options when it comes to student loan repayment. For starters, the Department of Education introduced the new Repayment Assistance Plan (RAP) which is an income-driven plan. This is intended to help low-income individuals find a more manageable monthly payment. And depending on your adjusted gross income, your monthly payment could be as low as $10.
If you are an existing borrower, you can still choose a different Income Based Repayment (IBR) plan prior to July 1, 2028. After that date, you will be moved automatically into the new RAP if you did not choose a different repayment plan.
At the expense of sounding like a nagging parent, you should also prioritize savings. Build an emergency fund to help you deal with unforeseen challenges. Even if you only have enough saved to cover 3 months of expenses, that will put you in a position of strength and help avoid costly setbacks with your student loan repayment.
Some individuals may also want to explore private students loans to federal loan options. Since several protections are being eliminated, it may be worthwhile to compare the two loan types; especially if you are not expecting to seek loan forgiveness in the future based on your career. Some private lenders now offer temporary hardship deferments, as well.
