Key facts
- Federal student loan changes impacting payment plans and graduate loan limits begin July 1.
- The SAVE plan is ending, potentially increasing monthly payments for millions.
- Graduate student loan caps are set at $200,000 for professional degrees and $100,000 for others.
- Parent PLUS Loans face new limits of $20,000 per student and $65,000 per family, with reduced repayment options.
- Borrowers using auto-pay will see a temporary 1% interest rate reduction starting July 1.
- The Trump administration's proposed changes to Public Service Loan Forgiveness were blocked by judges.
Millions of federal student loan borrowers will be affected by significant changes to repayment plans and loan limits beginning July 1. These adjustments, stemming in part from President Donald Trump's legislative actions, signal the end of the Biden-era SAVE plan and introduce new restrictions on graduate and Parent PLUS loans, potentially increasing monthly payment burdens for many.
The SAVE plan, known for its lenient terms, faced legal challenges and is now being discontinued. Approximately 7.5 million borrowers enrolled in the SAVE plan will receive notices and have 90 days to select a new income-driven repayment plan. Failure to do so by the deadline will result in automatic enrollment in a standard repayment option by the Education Department.
Graduate students will face new federal loan caps: $200,000 for professional degree programs and $100,000 for other graduate studies, a reduction from previous unlimited borrowing. However, the administration has revised these rules to restore eligibility for higher loan amounts for students in fields like nursing and physical therapy.
Parent PLUS Loans are also subject to new limitations, capped at $20,000 per student and $65,000 per family. New Parent PLUS borrowers from July 1 onward will be restricted to a tiered standard payment plan, losing access to income-driven repayment options. Existing Parent PLUS borrowers who consolidated their loans before July 1 can remain on an income-contingent plan until June 30, 2028, after which they will be moved to an income-based plan.
For all borrowers, a 1% interest rate reduction will be available starting July 1 for those enrolled in auto-pay, an increase from the current 0.25% discount, though this reduction is temporary and will last until June 2028. The Education Department is also updating the available income-driven repayment plans for new borrowers, limiting them to the Repayment Assistance Plan and the Income-Based Repayment Plan.
Separately, a Trump administration proposal to alter eligibility for the Public Service Loan Forgiveness Program was blocked by federal judges, meaning no changes will be made to that program.