Costly Student Loan Mistakes To Avoid in 2026 With the Rules Changing

If you've been feeling confused and overwhelmed by your student loans lately, it's not just you. From the pandemic payment pause to the rollback of the SAVE plan, the rapid pace of federal student loan changes has made it almost impossible to keep up.

Another wave of policy updates is set to take effect on July 1, 2026. A survey commissioned by Credible found that more than 60% of Americans ages 18 to 61 with student loans were unaware of, or unprepared for, those changes.

In the midst of the uncertainty, it's easy to make missteps that could cost you, whether that's ending up in the wrong repayment plan or missing key deadlines. To help you stay on track, we spoke with student loan experts about the most common mistakes borrowers are making and how to avoid them.

1. Not actively checking and managing your student loans

While it may be tempting to ignore your student loans, it pays to be proactive.

“One of the most common mistakes I see is borrowers being passive with their loans, meaning they’re not logging into their accounts, not reviewing their repayment plan annually, and not understanding what type of loans they have,” says Sonia Lewis, Ed.D., and founder of The Student Loan Doctor.  

She recommends reviewing your student loans so you have a clear picture of your debt. 

“Log into your account on StudentAid.gov and understand your loan types, balances, and repayment status,” says Lewis. “That’s your foundation.”  

If you have private student loans, you can find the details by logging into your account on your loan servicer's website. Checking in on your loans can help you catch any issues early and make sure you're in the right repayment plan. 

“There are big financial consequences for ignoring student loans,” says Nikolas Grotewold, a student loan and scholarship counselor at Inspira Advantage. “Since these are typically large sums of money, even small changes or missed payments in repayment plans can have major repercussions.” 

2. Choosing a repayment plan without a clear strategy

There are multiple repayment plans for federal student loans, so review your options to find the best one for you. 

“Another major issue is choosing the wrong repayment plan without strategy,” says Lewis.

“Many borrowers are placed into plans like … standard repayment without realizing they may qualify for more favorable options.”

For example, an income-driven repayment plan may be better if your monthly payments are too high or if you're pursuing Public Service Loan Forgiveness. Some borrowers prefer graduated repayment to standard repayment, which involves lower payments that gradually increase over time. 

Picking your repayment plan isn't a one-and-done decision, either. 

“Re-evaluate payment plans annually,” Grotewold recommends. “As income and career paths change, repayment plans should change too.”

Private student loans don't offer as much flexibility as federal loans, but your lender may be willing to make adjustments, especially if you're facing financial hardship. 

3. Not preparing for the elimination of some repayment plans 

Federal student loan repayment options are changing over the next few years, so it's important to prepare yourself. 

“In 2026 and beyond, one of the most significant costly mistakes is assuming your current plan will remain available,” says Lewis. 

The SAVE Plan has been struck down, for example, and SAVE borrowers will need to switch to a new plan. Other income-driven options, specifically PAYE and Income-Contingent Repayment (ICR), will also be phased out by July 2028. 

If you're already on one of those plans, you'll have two income-driven repayment options: Income-Based Repayment (IBR) or a new Repayment Assistance Plan (RAP) starting July 1, 2026. 

“If you're in repayment on your own loans, understand the repayment plan changes,” recommends Robert Farrington, student debt expert and founder of The College Investor. “If you're in SAVE forbearance, do your own homework on what your estimated IBR and RAP payment will be.”

While your loan servicer can pick a plan for you, you'll be better off crunching the numbers yourself to find the best fit.

4. Not staying up-to-date on changing policies 

Repayment plans aren't the only changes coming to the federal student loan system, and ignoring these shifts could be costly. 

“The biggest mistake I see right now are people not checking and understanding their options,” says Farrington. “There are changes, and you need to know which apply to you.”

Here are a few examples: 

• New graduate borrowers will face revised borrowing limits and the elimination of the grad PLUS loan program after July 1, 2026.
• Current graduate borrowers can retain access to current rules (and the grad PLUS loan program) for 3 more years or until the end of their program, whichever comes sooner. 
• Parent PLUS borrowers who want to qualify for income-driven repayment may need to consolidate their loans before April 1, 2026. Otherwise, they'll be shut out from IDR.

Figuring out what these changes mean for you can help you make the best decisions for your student loan debt. 

“I think too often borrowers are stuck watching headlines, seeing policy changes, learning about court cases, but not translating that into their own unique financial situation,” says Farrington. “The bottom line is that borrowers need to run their own numbers.”

5. Ignoring forgiveness programs you may qualify for

While there have been many changes to federal student loan policy, most forgiveness programs are still operating and available. That's why Grotewold says a big mistake he sees borrowers make is “not considering forgiveness pathways.” 

“Align your repayment strategy with your career plan,” he says. “If you are pursuing a non-profit role, it might be best to use Public Service Loan Forgiveness.”

PSLF forgives federal student loans after 10 years in public service and 120 qualifying payments on an income-driven repayment plan. The Department of Education also offers up to $17,500 in forgiveness to qualifying teachers in low-income schools. 

Plus, income-driven repayment plans can end in loan forgiveness at the end of your term. The current IDR plans offer forgiveness after 20 or 25 years, while the new RAP plan can lead to forgiveness after 30 years. 

6. Refinancing federal loans without understanding the tradeoffs

Refinancing student loans can be a savvy repayment strategy for some borrowers. It has the potential to reduce your interest rate and adjust your repayment terms. Plus, you can combine multiple loans into one, which simplifies repayment. 

But refinancing federal student loans has some tradeoffs. 

“Refinancing federal loans into private loans might look like a better deal, but you … give up protections like IDR, deferment options, and forgiveness programs,” says Grotewold.

If you refinance federal loans, you replace them with a private loan, so you'll no longer be eligible for federal programs. If you'd like to retain access, refinancing federal loans probably wouldn't be the right move for you.

Keep in mind that you don't have to refinance all your loans. You might benefit from refinancing high-rate private loans while keeping your federal loans as they are.

7. Overlooking the warning signs of delinquency or default 

Missing payments can cause your student loans to go into delinquency and, eventually, default, so it's important to act before you miss any bills. 

“As collections resume, borrowers who are not in an active repayment plan or rehabilitation program could face wage garnishment, tax refund offsets, or Social Security garnishment,” says Lewis.

Involuntary collections have been paused, but they could resume in the future, especially after defaulted federal student loans have been shifted to the Treasury Department. Other negative consequences of missing payments include damage to your credit and late fees. 

If you're concerned about affording payments, take action as soon as possible. Explore federal options for income-driven repayment, forbearance, and deferment. Some private lenders also offer deferment or forbearance if you lose your job or are facing financial difficulties.    

Contact your loan servicer before you miss payments to see if they can help you avoid delinquency or default. 

Stay ahead of changes to avoid costly student loan mistakes 

Student loan policies have become quite complicated, and even more shifts are on the horizon. Through this rollercoaster of changes, you can stay on top of your debt by taking a proactive approach.

Regularly review your loans, understand your repayment options, and inform yourself about the policy changes starting on July 1, 2026, and beyond. If you're feeling lost, consider seeking advice from an expert.

“Given the complexity of today’s student loan system, working with a knowledgeable expert or attending educational workshops can help borrowers avoid costly mistakes and make informed decisions that align with their financial future,” says Lewis.