Student Loan Changes: What You Need to Know

The recent legislation signed by President Donald Trump, dubbed the "Big Beautiful Bill, " brings significant changes to student loan repayment. This bill, passed by Congress, introduces new rules that could make it tougher for borrowers to manage their loans. One of the biggest changes is the elimination of existing income-driven repayment plans. These plans are being replaced by two new options that are less favorable. The first option, the Repayment Assistance Plan, sets payments between 1% and 10% of a borrower's income, with a minimum payment of $10. Any remaining balance is forgiven after 30 years. However, this is not as beneficial as the SAVE plan proposed by former President Joe Biden, which would have forgiven loans for some borrowers after 10 years. The second option is a new standard repayment plan. This plan sets fixed payments for 10 to 25 years, depending on the original loan amount. This change means borrowers will have fewer options to choose from, making it harder to find a plan that fits their financial situation. The bill also removes the ability to defer loan payments during economic hardship or unemployment. This leaves standard forbearance as the only option to delay payments, which can be problematic for those facing financial difficulties. For graduate students, the bill eliminates the graduate PLUS program, which allowed borrowing up to the full cost of attendance. The parent PLUS program remains, but with a lifetime cap of $65, 000. This could impact many students pursuing higher education. The legislation also aims to hold colleges accountable by cutting off federal student loan eligibility for programs where graduates earn less than the median high school graduate in their state. Additionally, it extends Pell Grants to shorter-term programs, a move supported by Education Secretary Linda McMahon. Critics argue that these changes will make it harder for borrowers to manage their loans. Sen. Elizabeth Warren and Natalia Abrams from the Student Debt Crisis Center have expressed concerns that the bill will increase loan payments and leave millions of borrowers with fewer repayment options.