politics
Student Loan Repayment Changes Take Effect July 1 Under New Law
The SAVE plan ends July 1 and is replaced by rules in President Donald Trump’s One Big Beautiful Bill Act. Roughly 7 million borrowers must switch plans or face automatic enrollment in standard repayment.
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The SAVE student loan repayment plan ends July 1 and is replaced by changes enacted under President Donald Trump’s One Big Beautiful Bill Act, Washington Examiner reported. Education Secretary Linda McMahon stated in a December post on X that the SAVE plan would have cost taxpayers more than $342 billion over 10 years.
SAVE’s roughly 7 million borrowers have until the July 1 deadline to move to a new plan or be automatically enrolled in a standard repayment option.
The new Repayment Assistance Plan sets payments at about 1% to 10% of income, with loan forgiveness available after 30 years. Alex Beene, who teaches financial literacy at the University of Tennessee at Martin, told Newsweek that the plan requires a minimum monthly payment. Stricter borrowing limits also apply.
Parent loans are capped at $20,000 per year with a $65,000 lifetime limit. Graduate and professional students face an annual limit of about $20,500 and a $100,000 lifetime cap. Grad PLUS loans are eliminated for new borrowers.
Borrowers enrolled in auto-pay receive a 1% interest rate incentive. Pay As You Earn and Income-Contingent Repayment plans will stop accepting new borrowers in July and be phased out by 2028. Over 40 million Americans have student loan debt.
