The Ombuds Observer
March 2026 | Edition 009
| | Welcome to the March 2026 issue of The Ombuds Observer! Each issue brings helpful tips and timely updates on education loans, as well as a few insights to make the whole process a little less overwhelming. We’re glad you’re here! | |
U.S. Department of Education Announces Federal Student Loan Portfolio Migration to U.S. Department of Treasury
March 19, 2026 - The U.S. Department of Education (ED) and the U.S. Department of Treasury (Treasury) announced a new phased Interagency Agreement (IAA) that will migrate management of the federal student loan portfolio from ED to Treasury under the Federal Student Assistance Partnership. The primary goal of the Partnership is for Treasury to take on operational responsibilities for federal student aid, a move that both agencies state in the official fact sheet, “…will improve the administration of federal student aid programs for students, institutions, taxpayers, and other stakeholders.”
Under the agreement, the Department of Treasury will assume operational responsibility in phases:
| | | | Handle the collections process on defaulted federal student loans. | | | | | Provide support on non-defaulted federal student loans. | | | | | Support FSA in other operational functions such as FAFSA and Pell Grants. | | | |
The current portfolio stands at approximately $1.7 trillion. Fewer than half of federal student loan borrowers are currently in repayment and nearly a quarter of borrowers are in default. It is stated that, “The partnership will draw on Treasury’s expertise in managing highly complex financial and information technology systems and in collecting delinquent and defaulted debt for federal agencies.” The administration believes that moving federal student loans to Treasury will provide better oversight and help borrowers back into repayment.
A timeline has not yet been released, but ED maintains it will communicate directly with stakeholders, according to the press release.
| | The One Big Beautiful Bill Act has permanently changed the rules for Parent PLUS borrowers seeking Public Service Loan Forgiveness (PSLF) | | |
New federal legislation has created urgent deadlines that could permanently lock Parent PLUS Loan borrowers out of income-driven repayment plan options and ultimately the ability to apply for Public Service Loan Forgiveness (PSLF). To preserve access to Income-Driven Repayment (IDR) plans and forgiveness programs like PSLF, current Parent PLUS borrowers must consolidate existing loans into a Direct Consolidation Loan (DCL) by July 1, 2026, and have at least one disbursement before June 30, 2026.
The U.S. Department of Education (ED) also strongly encourages (via their OBBBA guidance) Parent PLUS Loan borrowers considering a Direct Consolidation Loan to apply by April 1, 2026, to ensure enough processing time. Current processing time ranges from 4-6 weeks, and current guidance indicates DCL applications dated after April 1, 2026, may not be processed and disbursed prior to the June 30th deadline and ED will be honoring processing date, not application date.
Parent PLUS Loan borrowers interested in applying for Public Service Loan Forgiveness should consider the following:
| | Borrowers planning to consolidate should do so by 4/1/2026, to ensure processing time. | | | | |  |
Existing Parent PLUS Loans must be consolidated into a Direct Consolidation Loan BEFORE July 1, 2026 (refer to above guidance)
- Consolidating loans will result in a weighted average of PSLF counts
- The payment count will be based on the balance and payment history of each loan included in the consolidation
| | | | |
Must be enrolled in an Income-Driven Repayment (IDR) plan BEFORE July 1, 2028
- Make at least ONE monthly payment on the Income-Contingent Repayment (ICR) Plan before July 1, 2028
- After at least one payment in ICR, you can apply to switch to Income-Based Repayment (IBR)
| | | | | Make 120 qualifying monthly payments | | Parent PLUS Loan borrowers who meet the above requirements and are interested in applying for PSLF can do so on StudentAid.gov. Additional information and guidance can be found through the PSLF Help Tool. | | Parents borrowing ANY new federal student loan after July 1, 2026 (for the same child, for another child, for yourself) will lose their Income-Driven Repayment (IDR) plan and forgiveness access on ALL Parent loans, including ones that have already been consolidated. | | |
Time Has Run Out for Saving on Valuable Education (SAVE) Plan
March 10, 2026 - After almost 2 years of being in limbo, the U.S. Court of Appeals for the 8th Circuit issued a judgement officially ruling that the Saving on Valuable Education (SAVE) Plan is not a legal repayment plan and will be dismantled. There are currently over 7 million student loan borrowers enrolled nationally.
The U.S. Department of Education (ED) issued a press release March 27, 2026, announcing they have started issuing guidance for borrowers enrolled in SAVE. The guidance will advise borrowers on how to enroll in other repayment options as well as detailing the changes to repayment options slated to begin July 1, 2026. ED states all SAVE borrowers will receive this guidance over the next week.
The press release also notates the following:
| | | | Starting on July 1, federal loan servicers will begin issuing notices to borrowers, instructing them to exit the illegal SAVE Plan and enroll in a legal repayment plan within 90 days. Borrowers who do not transition plans within the 90-day period communicated by their servicer will be automatically enrolled into either the Standard Repayment Plan, or the new Tiered Standard Plan that will be available beginning July 1. Servicers will notify borrowers of their specific 90-day deadline. | | Our office strongly recommends SAVE borrowers start exploring their other repayment options as soon as possible and not wait until the July 1st notice. Below are two helpful calculators that may aid you in determining which repayment plan best suits you and your financial situation. | |
Federal Student Aid
Loan Simulator
| | |
EDCAP
Repayment Plan Calculator
| |
Additional Tips for SAVE Borrowers:
- Keep your contact information up to date with your student loan servicer and ED
- Check your accounts regularly for any updates
- Be ready to change plans when necessary
| | | We're going to keep these tips pinned as helpful reminders as we head toward the upcoming student loan changes that will be effective July 1, 2026. | | | |
Check Your Repayment Status
Log on to Federal Student Aid to understand whether you are in default, delinquent, or in a repayment plan — and check if wage garnishment or tax refund offset notices apply to you.
| | | |
Plan for Potential Tax Liability
If you’re nearing forgiveness under an IDR plan, consult a tax professional about the impact of taxable forgiveness in 2026.
| | | |
Stay Informed on Processing Delays
Because of legal challenges and plan revisions, applications and forgiveness processing may be delayed — stay in close contact with your servicer.
| |
Five-Part Webinar Series with Student Debt Crisis Center Continues!
The final two webinars in our five-part webinar series in partnership with Student Debt Crisis Center (SDCC) are right around the corner! Join us as we wrap up this informative series in April. These final two revisit our earlier topics, starting with our most popular topic, “Public Service Loan Forgiveness: What You Need to Know About the Popular Program.” We’ll conclude the series with, “Major Overhaul of the Student Loan System,” an in-depth look at all the current and upcoming changes of the student loan landscape.
Registration for Webinar 4 on PSLF is now open, info below. We hope to see you there!
| |
WEBINAR 4
Public Service Loan Forgiveness: What You Need to Know About the Popular Program
| | | | |
Virtual via Zoom
A meeting invite will be sent upon registration.
| |
Coming in April: Limited Evening Bookings!
During the month of April, our office will be offering limited evening appointments on the dates listed to help borrowers ask their questions.
| | |
Evening Appointment Calendar
April 2, 2026
April 6, 2026
April 13, 2026
April 22, 2026
April 30, 2026
| | | | | |
