Millions of Americans juggling student loans are set to suffer a major shake-up. The latest development? As per The Hill, the sweeping new law signed by President Donald Trump on July 4 slashes the number of federal loan repayment options. It also imposes new borrowing caps, limiting how much students can take out for college.
After years of shifting policies during and after the pandemic, borrowers now must re-learn the system, and adjust fast. While some may find the changes simplify repayment, others worry it will restrict access to necessary funds. Either way, the student debt landscape is shifting, again.
New federal loan repayment choices explained
The One Big Beautiful Bill Act drastically narrows repayment options, phasing out popular plans like SAVE, PAYE, IBR, and ICR, according to CBS News. Borrowers currently enrolled in these programs have until July 1, 2028, to switch to a new plan. But for the 7.7 million people in the SAVE plan, interest collection will restart as early as August 1, the Department of Education announced.
Starting July 1, 2026, new borrowers will choose between just two options: a standard repayment plan or a new income-driven option called the Repayment Assistance Plan. The standard plan spans 10 to 25 years with fixed monthly payments. The Repayment Assistance Plan allows borrowers to pay 1 per cent to 10 per cent of their income monthly, for up to 30 years. After that, any remaining balance is forgiven.
{{/usCountry}}Starting July 1, 2026, new borrowers will choose between just two options: a standard repayment plan or a new income-driven option called the Repayment Assistance Plan. The standard plan spans 10 to 25 years with fixed monthly payments. The Repayment Assistance Plan allows borrowers to pay 1 per cent to 10 per cent of their income monthly, for up to 30 years. After that, any remaining balance is forgiven.
{{/usCountry}}"The One Big Beautiful Bill gives families the freedom to choose the best education for their children while reforming a broken federal loan system to promote responsibility, affordability and opportunity," the White House said in a statement to CBS MoneyWatch.
According to The Hill, student loan advocates have asked borrowers to talk to nonprofit organizations as well as the federal government to figure out the next steps when it comes to loan repayment options.
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FAQs
Will I be eligible for student loan forgiveness?
You may be eligible for forgiveness if you’ve made 120 qualifying payments while working full-time for a government or nonprofit employer under the PSLF program.
Is student loan forgiveness still happening?
No, mass loan forgiveness isn’t happening but targeted relief and repayment support are still available for eligible borrowers.
How to get 100 per cent student loan forgiveness?
There’s no universal 100 per cent forgiveness option, but programs like PSLF, IDR, and profession-specific options can lead to full loan cancellation if you meet the right criteria.
Will student loan forgiveness be automatically applied?
No, student loan forgiveness is generally not automatically applied.