US student debt repayment system is being overhauled – here’s what to know
Summary
The U.S. student loan repayment system will change on July 1, ending the Biden-era Save repayment plan after a court ruling. Borrowers will face stricter payment schedules, fewer forgiveness options, and must choose new repayment plans or be placed on fixed payment plans.Key Facts
- The Save plan started in 2023 to reduce payments and offer early forgiveness for some borrowers.
- A federal court ordered the Save plan to end on July 1 after challenges by Republican state attorneys general.
- Over 7 million borrowers are currently enrolled in the Save plan.
- After July 1, borrowers have 90 days to select a new repayment plan.
- Existing income-driven plans like IBR, PAYE, and ICR will remain but push for faster repayment and less forgiveness.
- PAYE and ICR plans will be phased out by summer 2028.
- Borrowers who don’t choose a plan will be put on fixed-payment plans, which usually have higher monthly payments and little or no forgiveness.
- The Department of Education says these changes aim to simplify the repayment system but require borrowers to pay back all their loans.
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