Major changes to the federal student loan system are now in effect, reshaping repayment options, borrowing limits, and monthly payment amounts for millions of Americans.
Roughly 43 million Americans currently carry student loan debt, totaling nearly $1.7 trillion, according to the Office of Federal Student Aid.
One of the most immediate changes is the elimination of the Biden-era Saving on a Valuable Education, or SAVE, repayment program, which currently enrolls about 7 million borrowers.
Those borrowers are being notified this week that they have 90 days to switch to a new repayment plan or face automatic enrollment in one of two alternatives.
The two replacement options are the Repayment Assistance Plan, a new 30-year income-driven option, and the Tiered Standard Plan, which carries a 10-to-25-year repayment window.
Either option could increase monthly payments by hundreds of dollars for borrowers currently on the SAVE plan.
According to the Department of Education, the earliest any borrower will be moved off SAVE is September 29, 2026, with notices staggered so some borrowers may have additional time.
Two existing income-driven repayment options, Pay as You Earn and the Income-Contingent Repayment plan, will be phased out entirely in 2028 and are only available to borrowers whose payments under other plans would be higher.
The new Repayment Assistance Plan does not offer loan forgiveness until 30 years of repayment, which is longer than the existing income-driven plans that carry 20-to-25-year forgiveness timelines.
Graduate students now face annual borrowing caps of $20,500 and a cumulative limit of $100,000 under the One Big Beautiful Bill Act, ending the uncapped Graduate PLUS loan program.
Professional students will face a $50,000 annual borrowing limit and a $200,000 cumulative ceiling, representing a significant restriction compared to previous unlimited borrowing through PLUS loans.
Parent PLUS loans are now capped at $20,000 per year and $65,000 in total, and any loans taken out or consolidated after this week will only qualify for the Tiered Standard Plan.
Parents with these loans will no longer qualify for income-driven repayment plans or Public Service Loan Forgiveness, according to the Federal Student Aid office.
A new lifetime borrowing cap of $257,500, covering subsidized, unsubsidized, and PLUS loans combined, has been introduced where no such ceiling previously existed.
The Department of Education did announce one benefit, offering borrowers enrolled in autopay a 1% reduction in interest rates, available through June 30, 2028.
Borrowers enrolled in autopay were already receiving a 0.25% interest rate reduction, making the new benefit a notable improvement for those who act before September 30 of this year.
Student borrower advocacy groups warn that higher monthly payments will deepen financial strain for Americans already dealing with inflation, rising food and energy costs, and housing affordability pressures.
Advocates also caution that the new restrictions could push low-income and first-generation students toward private lenders, where interest rates are higher and borrower protections are significantly weaker.
