Changes to student loans are taking effect July 1. Here’s what to know
Summary
Starting July 1, new rules for federal student loans will affect millions of borrowers in the United States. These changes end the SAVE repayment plan and set new borrowing limits for graduate students, which may increase monthly payments for many people.Key Facts
- The SAVE plan, a student loan payment option with lenient terms, ended on July 1 after being struck down by a court.
- About 7.5 million borrowers were enrolled in the SAVE plan and must switch to a new repayment plan within 90 days or be automatically enrolled in a standard plan.
- Nearly 9 million Americans are currently in default on their federal student loans.
- Borrowers who use automatic payment will get a temporary 1% interest rate reduction through June 2028. This replaces a previous 0.25% discount.
- Graduate students’ federal loan limits have changed: professional degree programs now have a $200,000 cap, while other graduate programs have a $100,000 cap.
- The revised loan limits restore higher borrowing amounts for specific graduate fields like nursing and physical therapy.
- The changes may lead to higher monthly payments, and some borrowers may struggle to afford their loans.
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