Student loan overhaul: How Donald Trump's 'One Big Beautiful Bill' will affect borrowers

Donald Trump's 'One Big Beautiful Bill' is changing student loans, cutting plans and capping borrowing. Borrowers must adapt fast as rules shift once again.

Published on: Jul 14, 2025, 02:54:37 IST

By HT US Desk

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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.

Donald Trump's 'One Big Beautiful Bill' has turned up the heat on student loan borrowers. (Getty Images via AFP)

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.

Also read: Student loan borrowers could face $3,500 more in interest this year. Who will be affected by SAVE plan

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.

"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.

Also read: Trump and Melania to attend FIFA Club World Cup final amid anniversary of assassination attempt

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.

ABOUT THE AUTHOR
HT US Desk
The Hindustan Times US Desk brings you the latest news and developments from across the United States. The team covers everything from breaking news and politics to sports, business, entertainment and stories that are trending across the country. Our coverage includes the White House, Congress, US elections, immigration and visa updates, H-1B, green cards, Social Security, education, jobs, layoffs, the economy, technology and major policy changes. We also closely follow stories that matter to Indian and South Asian communities in the US. The desk covers major US sports, including the NFL, NBA, MLB and NHL, along with player news, injuries, schedules, results and major events. Entertainment coverage includes Hollywood, celebrities, television, streaming, music and pop culture. We also report on breaking developments, major incidents, weather, public safety, court cases and other stories making headlines across the country. When a major policy or news development affects people's everyday lives, the team works to explain what happened, what it means and what readers need to know. Alongside breaking news, the US Desk produces explainers and practical stories on topics such as immigration, Social Security, taxes, education, employment and government programmes. The team also works on science, tech, business and AI stories analyzing the impact they may have on people. The team follows developments throughout the day, keeping an eye on official announcements, public records, reliable news sources and what people are talking about across the US.Read More

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