The Trump administration's "Big Beautiful Bill" means big changes to student loans.
The largest overhaul to the student loan system in decades will mean changes for both current and future borrowers.
"The big takeaway is that borrowers are going to have fewer options to repay their student loans and they're going to be paying more, and in many cases, much longer," said Abby Shafroth, Managing Director of Advocacy at the National Consumer Law Center.
The sweeping rules that President Donald Trump signed into law make important distinctions between current borrowers and new ones.
If you're one of the 43 million Americans who currently owe money on student loans, know that there are three repayment options — the Pay As You Earn, Income Contingent Repayment and SAVE plans — that are being phased out by July 2028.
For those in the SAVE plan, there is pending litigation that could put you back into repayment much sooner.
"So those borrowers are still going to be sort of waiting and subject to what happens in the litigation. They remain very much in limbo for now," Shafroth said.
The Department of Education announced Wednesday that interest on loans on the SAVE plan will start accruing in August of this year. Interest and payments have been paused during challenges to the Biden era plan that offered the lowest monthly payments to borrowers.
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The income-based payment plans are expected to migrate to a new one called the Repayment Assistance Plan (RAP), which is expected to raise monthly payments.
"The RAP plan is totally different because they don't carve out any amount of income to meet your basic needs. Instead, they apply a percentage to your entire adjusted gross income," Shafroth explained.
Previous repayment plans only considered income above 150% of the poverty level. RAP will consider all income and base the percentage owed on income brackets.
There are some upsides, like increasing the number of times you're allowed to rehabilitate out of default from one to two.
New borrowers will see the biggest changes, with more stringent caps on borrowing for parents, graduate students, and professional schools. This raises concerns for hopeful law students like Daniel Soria in Southern California.
"Initially, my plan was to graduate from my undergrad degree and apply in the next upcoming cycle. The problem now is that a lot of the aid I would have relied on to make it financially viable, is no longer going to be available," Soria told Scripps News Group.
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This changes existing federal loan caps to $20,000 per year, per child for parents borrowing with an overall cap of $65,000 per child.
Graduate students are limited to $20,500 per year in loans and $100,000 in total.
For students in professional schools, the limits are $50,000 a year and $200,000 in total.
There's also a lifetime cap of $275,500 for any student. The limits take effect July 1, 2026, and don't apply to students who are already borrowing money through the remainder of their program.
Experts and students fear the caps will make higher education unobtainable for some students and open others up to predatory lending in the private marketplace.
New borrowers will also be limited to two repayment plans — a Standard Repayment Plan or RAP.
The Standard Repayment Plan is a fixed rate each month over the course of 10 to 25 years, depending on the total loan amount. RAP replaces existing income repayment plans, setting a monthly rate based on income, including a spouse's income, that can be forgiven after 30 years. These are less generous than previous options that allowed for forgiveness 10 years sooner and lower monthly payments.
Forbearance and deferments for economic hardship or unemployment have also been eliminated for loans taken out after July 2025.
"The one other important thing I would flag for existing borrowers is that they will be treated as new borrowers next year if they consolidate their loans," Shafroth warned.
Her advice? If you're thinking of consolidating your loans, do it before July 2026 to have the most options.
This story was initially reported by a journalist and has been converted to this platform with the assistance of AI. Our editorial team verifies all reporting on all platforms for fairness and accuracy.
