The year 2025 was marked by significant upheaval for those with federal student loans, as major shifts took place in the loan system. As borrowers look toward 2026, it’s crucial to understand the key changes that have occurred.
SCOTT DETROW, HOST:
Federal student loan borrowers spent 2025 navigating extensive changes to the loan system, including modifications to repayment plans and borrowing caps. NPR’s Cory Turner offers insights into the past developments and future trajectory.
CORY TURNER, BYLINE:
The past year has been challenging even for student loan experts.
PERSIS YU: Let’s see. Where to start (laughter)?
TURNER: Persis Yu from the advocacy group Protect Borrowers highlights the latest significant development: the termination of President Biden’s Saving on a Valuable Education (SAVE) plan.
YU: SAVE was the most affordable, generous and flexible plan for millions of student loan borrowers.
TURNER: The SAVE plan faced legal challenges due to its affordability and flexibility, leading to a court freeze. Recently, the Trump administration proposed officially ending it.
BETSY MAYOTTE: People that made other financial decisions based on what they thought their payment was going to be on the SAVE plan, they’re in trouble.
TURNER: Betsy Mayotte, founder of The Institute of Student Loan Advisors, notes that approximately 7 million borrowers in the SAVE plan now face uncertainty.
MAYOTTE: In the history of student loans, a payment plan has never been challenged in court and has never been pulled out from existing borrowers.
TURNER: Those affected will need to seek alternative plans, potentially facing higher payments. Additionally, starting July, new borrowers will have only two plans available. Beyond repayment, significant changes impact graduate student borrowing.
PRESTON COOPER: Colleges could simply raise the price, pass the cost onto students, and the federal government would be required to write a check through the federal student loan program.
TURNER: Preston Cooper from the American Enterprise Institute explains that new strict borrowing limits were introduced to curb unchecked federal spending on graduate loans.
COOPER: I think that system was completely untenable, and I very much understand why Congress elected to end it.
TURNER: These limits may pressure schools to reduce costs, but until then, Persis Yu warns of a funding gap for many students.
YU: Students are going to have to make up that gap with some other type of funding. And many students are going to have to turn to the private student loan market.
TURNER: This situation leads to a consensus among experts.
YU: We are currently at, basically, the precipice of a default cliff.
MAYOTTE: I really do think we’re headed for historic default rates.
COOPER: We’ve got about 12 million borrowers right now who are either delinquent on their loans or in default on their loans.
TURNER: This represents over a quarter of all borrowers, raising questions about whether recent changes will help stabilize the situation or exacerbate defaults.
Cory Turner, NPR News.
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