Beginning July 1, significant changes to student loan repayment and forgiveness will be implemented by the federal government. These adjustments stem from the Republicans’ “One Big Beautiful Act” introduced last year.
Major Changes in Student Loan Repayment
For the 7 million borrowers currently enrolled in the Biden-era repayment plan known as SAVE, it’s time to make a switch. The program is ending, and any remaining participants will be automatically transitioned to a less flexible standard repayment plan unless they choose a new option.
New Repayment Plans
Two new repayment plans will be available for new borrowers, including the Repayment Assistance Plan (RAP), which is income-based. While RAP may require higher payments compared to SAVE, it offers benefits such as waiving extra monthly interest and providing assistance to lower-income borrowers in reducing their loan principal.
Changes in Loan Forgiveness
Obtaining student loan forgiveness will become more challenging for new borrowers. However, public service loan forgiveness remains an option, promising debt cancellation after a decade of employment in public service roles.
Loan Limits for Graduate Students and Parents
Graduate students will face stricter borrowing limits, with a maximum of $20,500 per year unless enrolled in one of 11 professional degree programs. Similarly, parents and caregivers applying for Parent PLUS loans will encounter a new cap of $20,000 per child each year.
Expansion of the Pell Grant Program
The Pell Grant program is expanding to include workforce training courses, ranging from 8 to 15 weeks, for careers such as welding or nursing assistants.
For more details about these upcoming changes to student loans, visit npr.org.
