Significant modifications are set to impact federal student loan repayment and forgiveness policies starting July 1. These changes are poised to affect millions of borrowers across the nation, introducing new plans and limits that aim to reshape the landscape of student debt management.
Key Changes in Student Loan Repayment
AYESHA RASCOE, HOST: Major student loan changes go into effect on July 1. Here’s NPR education correspondent Cory Turner with the top six changes in just 90 seconds.
The End of the SAVE Plan
CORY TURNER, BYLINE: The Biden-era repayment plan known as SAVE is coming to a close. Approximately 7 million borrowers currently enrolled in SAVE must switch plans to avoid automatic enrollment into a less flexible standard repayment plan.
New Repayment Options for Borrowers
New borrowers will have access to two fresh repayment plans. Among them is the Repayment Assistance Plan (RAP), an income-based option. This plan is expected to require higher payments compared to SAVE, yet it offers benefits such as waiving additional monthly interest and supporting lower-income borrowers in reducing their principal.
Challenges in Loan Forgiveness
For those seeking student loan forgiveness, the path becomes slightly tougher. New borrowers can still pursue public service loan forgiveness, which cancels debt after a decade of employment in a public service role.
Limits Imposed on Graduate and Parent Loans
Graduate students will now face tighter borrowing restrictions, capped at $20,500 annually unless enrolled in specific professional degree programs. Similarly, parents and caregivers utilizing Parent PLUS loans will encounter a $20,000 per child annual limit.
Expanded Pell Grant Opportunities
The Pell Grant program is expanding its reach to support workforce training. This includes courses ranging from 8 to 15 weeks, covering fields such as welding or nursing assistance.
RASCOE: And if you didn’t have your pen handy for Cory’s lightning round, just go to npr.org for that and everything else you need to know about the coming student loan changes.
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