The U.S. federal student loan system is about to undergo major changes that will affect millions of Americans. After the signing of the One Big Beautiful Bill by President Donald Trump, borrowers can expect updates to repayment plans, borrowing limits, and benefits under programs like the SAVE Plan. With over 43 million Americans carrying federal student debt, understanding these changes is crucial for planning your financial future and avoiding surprises.
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What’s Happening to Student Loan Repayment Plans
Income-driven repayment plans like Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) have allowed borrowers to pay what they can afford based on income. Starting July 1, 2028, these plans will be phased out, and borrowers will move to the Income-Based Repayment (IBR) plan, which will become the standard option. This shift aims to simplify repayment, but its effects will vary. Some borrowers may see higher monthly payments, while others could enjoy more predictable and manageable payments. Early financial planning is essential, allowing borrowers to adjust budgets and consider strategies like refinancing or updating repayment choices before the transition.
| Repayment Plan | Current Status | End Date | Future Plan |
| PAYE | Active | July 1, 2028 | Moves to IBR |
| ICR | Active | July 1, 2028 | Moves to IBR |
| IBR | Active | No cutoff | Remains available |
This table helps borrowers understand which plan they are currently on and when changes will take place. Keeping track of these dates ensures better planning and avoids unexpected payment increases.
New Borrowing Limits for Graduate Students and Parents
The law also introduces stricter limits for certain types of loans starting July 1, 2026. While undergraduate loan limits stay the same, graduate students and parents taking out PLUS loans will face tighter rules. Graduate PLUS loans will have a $200,000 lifetime cap, down from previous limits tied to the cost of attendance. Parent PLUS loans will now be limited to $20,000 per year per child, with a lifetime maximum of $65,000.
These changes will particularly affect families paying for expensive programs like law, medicine, or advanced research degrees. Borrowers may need to combine federal loans with savings, scholarships, or private loans to cover tuition costs. Planning ahead is key to managing education expenses under these new rules.
SAVE Plan Updates, Interest Will Resume
The SAVE Plan, which temporarily paused interest for nearly 8 million borrowers, will start charging interest again on August 1, 2025. For borrowers in forbearance, balances will grow, and time spent in forbearance won’t count toward forgiveness programs like Public Service Loan Forgiveness (PSLF). Resuming payments now can help borrowers stay on track for forgiveness and prevent unexpected increases in debt due to resumed interest.
Steps to Take to Stay Ahead
With these changes coming, borrowers should act now to avoid surprises. Start by using repayment calculators to see how payments may change when PAYE and ICR end. Factor in the new caps for graduate and Parent PLUS loans to plan future tuition payments. Keep an eye on SAVE Plan updates to avoid unexpected interest charges, and seek guidance from financial aid offices or certified loan counselors. Early preparation can make a big difference in managing debt effectively and maintaining progress toward forgiveness programs.
- Check repayment calculators to estimate new monthly payments.
- Understand graduate and Parent PLUS loan limits.
- Keep track of SAVE Plan updates and interest resumption.
- Consult financial aid offices or loan counselors for personalized advice.
By understanding these reforms and taking action now, borrowers can manage federal student loans more effectively, stay on track for forgiveness programs, and avoid surprises when the new rules take effect.
Frequently Asked Questions (FAQs)
- When will PAYE and ICR plans end?
Both plans will be phased out by July 1, 2028, with borrowers moving to IBR. - How will the new PLUS loan limits affect families?
Graduate PLUS loans are limited to $200,000 lifetime, and Parent PLUS loans are capped at $20,000 per year per child, $65,000 lifetime. - Will the SAVE Plan charge interest on past balances?
No, interest resumes starting August 1, 2025, and is not applied retroactively. - How can I check my new repayment plan?
Log into your Federal Student Aid account and use online calculators to see how changes affect monthly payments. - Where can I get personalized advice about these changes?
Contact your college financial aid office or a certified student loan counselor for guidance.
