This is about to change.
“For all practical purposes, I would say that rescue is just dead at this point, even if it is technically to support life,” says Preston Cooper at the Conservative American Institute of Enterprises (AEI).
This month, the US Department of Education announced that on August 1, besides borrowers, again, it will See their balances grow – With interest. Since the saving plan is still accepted, borrowers will not be required to make payments. However, Cooper said that many borrowers, instead of watching their borrowing balloon, would probably want to move to a different plan.
Roxana Garza, Director of Higher Education Policy at Liberal Edtrust, is worried that the last -minute comparative message of interest rates will create problems at the education department that he saw Approximately half of her staff is shortened by the Trump administration.
“I think what is likely to happen now is that you will see a rush of people who are trying to take actions that will again create an even more lagging,” Garza said.
According to the Big Beautiful Bill Act, Save borrowers will have to change their plans by July 1, 2028, when Save will be officially closed. If they wait, although at the moment they cannot be required to make payments, they will see their loans burst out of interest.
But the two new plans that the law creates will not be ready for one year, but on the department websiteDesigned to help borrowers to navigate their repayment options, they do not reflect this confusing new landscape, except for a banner, which reads: “The loan simulator will be updated on a later date to reflect the latest legislative changes.”
As of July 1, 2026, new loans will be subject to new borrowing limits
Students will not see any changes to their loan limitsS But this is a very different story for students and parents.
For graduates, new limits will make it difficult for borrowers with lower and average income to visit more valuable programs. Current City plus loan Allows students to borrow to the price of their graduate program, but Republicans close it this time next year.
The occupation of students in the city will then be limited to $ 20,500 a year with a loan limit for graduates throughout the $ 100,000 schools, a large decline from the previous $ 138,500 cap.
How big will this be? AEI Cooper reduces the numbers and said: “Just under 20% of the masters’ students occupy the proposed limits.”
Borrowers working for professional higher education (ie Medical or Law Faculty) will be limited to loans to $ 50,000 a year and their lifelong cap increases from $ 138,500 to $ 200,000.
Parents and carers who use the Parents for Parents Plus to help students pay for college will also see new loan restrictions. They will be limited to $ 20,000 a year and, in general, to $ 65,000 per child.
Cooper says that only one -third of the parent plus borrowers with addicted children are currently removing more than this new annual loan cap.
The law also sets a new lifelong limit, for combined loans for students and graduates, at $ 257,500 per person.
Borrowers’ repayment options change dramatically
Republicans are reducing the opportunities to repay new borrowers from the current seven plans to two new plans. The new plans are:
1. The standard plan
The new borrowers will be assigned a repayment window between 10 and 25 years, depending on the amount of their debt, with equal monthly payments such as a mortgage mortgage.
Under this planBorrowers with bigger debts would qualify for a longer repayment period:
- It owes less than $ 25,000 and pay over 10 years.
- Do you owe $ 25,000 or more, but less than $ 50,000? The repayment expands to 15 years.
- Owes $ 50,000 or more, but less than $ 100,000: paying over 20 years.
- Anyone who owes $ 100,000 or more would pay off for 25 years.
2. The Plan to Support the repayment (RAP)
For borrowers, they are worried that they do not earn enough to cover the non -inflammatory monthly payments on the new standard plan, the Republicans have also created a plan to support the repayment (RAP).
RAP payments will largely be based on the total corrected gross income of borrowers (AGI).
- Borrowers who earn no more than $ 10,000 will be asked to pay $ 10 a month.
- Earn more than $ 10,000, but not more than $ 20,000, and your payment will be based on 1% of AGI.
- More than $ 20,000, but not more than $ 30,000, this will be 2% of AGI, etc.
- The repayment is doing 10% of AGI for borrowers who earn $ 100,000 a year or more.
Current borrowers will also have access to this new rap plan, as well as some older plans.
RAP is the latest in a long line of repayment plans based on income. How is it compared to previous plans?
Monthly payments for many borrowers with average income will be less compared to the more plans, according to multitude ExpertsS But Rap is not as generous as the plan for preserving the Biden era, which ceases again.
RAP will even require the lowest borrowers to make a minimum monthly payment of $ 10, completing the $ 0 option from previous plans and making it more expensive for these borrowers.
This new minimum payment of $ 10 would not have a big change in the government’s offices, said Jason Delis, who spoke with NPR in MayWhen he studied the student loan policy at the Urban Institute. Since then, Delis has been appointed to the Trump administration.
Delisle said that the purpose of the new RAP payment of $ 10 probably stems from “emerging studies that the requirement for people to make some payment every month is good because it keeps them connected to the loan and makes them less likely to be by defaultS “
But some borrower defenders are worried that this new minimum payment may have the opposite effect.
For borrowers with the lowest income, the $ 120-year request is “significant” in front of Edtrust’s NPR of EDTRUST to NPR. “I think this is necessary minimum payment will probably push more borrowers by default.”
But RAP also comes with several new benefits that borrowers are likely to appreciate.
RAP will give up the interest that has been left after the borrower has made its monthly payment.
If their monthly payment is $ 50, but they owe $ 75 a month interest, the government will give up the remaining $ 25.
Result: Borrowers will no longer see their loans growWhich was a common disadvantage of previous payment plans managed by income.
RAP borrowers will also see their balances go down every monthS
The government will go up to $ 50 to make sure that lower-income borrowers see that their main balances are shrinking.
For example, the borrower, whose monthly payment makes only $ 30 in its director, will see the government to delay an additional $ 20 a month.
Borrowers, whose monthly payments are already reducing their basic balance by at least $ 50, will not receive additional help from the government.
“It’s a form of a monthly loan for a loan,” Delis said. “This is dripping, dripping, dripping for forgiveness for a loan instead of waiting for the big repayment at the end of 20 years.”
The math for forgiveness for a loan will change.
While previous plans offer forgiveness in 20 or 25 years, RAP will extend this to 360 qualified payments or 30 years. That’s a big difference, Cooper said to AEI.
Borrowers with typical debt levels “and the typical income for their level of level will almost always be paid long before they hit this 30-year brand,” Cooper said. “So if you are going to rap, I wouldn’t think about forgiveness, because you will probably pay it before you hit 30 years.”
In short, the days of what Delis, called the “big payment”, ended.
But wait! Current borrowers have another option for forgiveness for a loan (sort of like).
In addition to the RAP, an older plan known as income-based repayment (IBR) will still be available to borrowers who take their loans before July 1, 2026.
Part of the reason IBR is that, unlike other income payment plans, the IBR was not created by the education department. It was created by Congress and was codified in the statute.
How does Ibr work? For borrowers with loans older than July 2014, their payments are limited to 15% of discretionary income. Better loans payments are limited to 10%.
As the Biden era saving plan is loaded, Delis said, most lower and average borrowers are likely to have lower monthly payments to the new RAP than IBR.
But, said Delis, borrowers with older loans may still want to enroll in IBR if they have been repayable for nearly 20 or 25 years so that they can qualify for forgiveness for a loan.
This is because IBR loans before 2014 qualified for forgiveness in 25 years. For newer loans, these are only 20 years-and both significantly shorter than the 30-year RAP schedule.
One major warning about all this: the education department has temporarily stopped processing all forgiveness for IBR borrowers because of the legal actions surrounding the savings plan, according to a statement from the deputy educated department Ellen Kest.
Keast said the rule of the Biden era explained Save “gave the power to count the IBR’s bidders for forgiveness of the loan” and since this rule is frozen by the courts, the department cannot accurately determine the forgiveness of the IBR loan. “The discards will resume as soon as the department manages to establish the correct number of payments,” Cyst said.
The department told the NPR that all borrowers who make payments after they are entitled to forgiveness will eventually receive a refund.
