06/29/2026
Student Loan Repayment Is Changing July 1. Here's What You Need to Know.
The One Big Beautiful Bill Act brings the most significant overhaul to federal student loan repayment in years. Some changes are expansions, while others are restrictions. Here's a clear breakdown by situation.
If you're on the SAVE plan:
The Biden-era Saving on a Valuable Education (SAVE) plan officially ends. Starting now, servicers will send notices opening a roughly 90-day window to choose a new repayment plan. If you don't choose, the government will choose for you, likely not in your favor.
Repayment options for existing borrowers (loans taken out before July 1) include:
- Standard Plan: Equal payments over 10 years.
- Graduated Plan: Payments start low and increase every 2 years over 10 years.
- Extended Plan: Fixed or graduated payments spread over up to 25 years.
- IBR (Income-Based Repayment): Pay 10–15% of discretionary income; forgiveness after 20–25 years.
- ICR (Income-Contingent Repayment): 20% of income over 25 years. Phased -2028.
- PAYE (Pay As You Earn): 10% of income over 20 years. Phased -2028.
- RAP (Repayment Assistance Plan): The new income-driven option. Payments range from 1–10% of your income; monthly interest above your payment is waived. Forgiveness after 30 years. Families get a $50/month reduction per dependent.
Repayment options for new borrowers (loans taken out on or after July 1) are limited to:
- RAP (see above)
- Tiered Standard Plan: Fixed payments with a term that scales with your balance: 10 years for under $25k, up to 25 years for $100k or more.
KEY CHANGES:
- Graduate students: Annual borrowing limits drop to $20,500/year and $100,000 total. Exceptions apply for 11 professional degrees including medicine, law, dentistry, pharmacy, and veterinary medicine ($50,000/year cap).
- Parent PLUS loans: Capped at $20,000/year per child ($65,000 total). New PLUS loans no longer qualify for income-driven repayment plans or Public Service Loan Forgiveness (PSLF).
- PSLF: Still exists; new language allows forgiveness to be denied to workers at employers with a "substantial illegal purpose."
- Short-term workforce training (Pell Grant expansion): For the first time, Pell Grants can now help cover 8–15 week job training programs. Programs must meet federal eligibility criteria.
- Autopay discount: Enroll in autopay before September 30, 2026, and receive a 1% interest rate reduction through June 2028.
PRIORITIES:
If you're on SAVE, don't wait. Log into studentaid.gov, review your options, and make a choice before your servicer makes one for you. For new and future borrowers, the options are simpler but more limited; understanding RAP vs. the Tiered Standard Plan early will save headaches later.
Feel free to reach out or drop a question in the comments.
Federal Student Aid
https://studentaid.gov
