Significant changes are coming to the federal student loan system starting July 1, impacting millions of borrowers across the nation.
These adjustments will result in higher monthly payments for some Americans, particularly those with lower incomes. Additionally, there will be new restrictions on loan amounts for many borrowers.
Currently, about 43 million Americans hold student loan debt, collectively amounting to nearly $1.7 trillion, according to data from the Office of Federal Student Aid, which operates under the Department of Education.
Education Secretary Linda McMahon, whose mandate includes closing the department, has declared that the Trump administration will no longer allow U.S. taxpayers to shoulder debts that do not belong to them.
This sweeping overhaul is part of President Donald Trump’s trademark legislation, the Working Families Tax Cuts Act, introduced last year alongside other executive orders aimed at reforming the Department of Education.
Here’s what borrowers need to know:
Fewer repayment options
Department of Education and education experts are touting the Trump administration’s student loan overhaul as the biggest change to the portfolio in decades.
One of the biggest changes is the end of a Biden-era repayment program called Saving on a Valuable Education or “SAVE.” There are currently about 7 million borrowers enrolled in that program, and now they will have 90 days to switch to a new plan to pay back their student debt.
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