Student Loans Transformed: New Bill's Impact on Your Debt

Money Explainers

Discover how the new "Big Beautiful Bill" affects your student loan repayment. Understand the new repayment plans and borrowing limits.Get the latest on the significant shifts in federal student loan programs. #EducationPolicy #StudentDebt#StudentLoanChanges

Transcript

00:00Student loan borrowers are about to experience significant changes to their repayment options,

00:05thanks to the passage of President Donald Trump's big beautiful bill.

00:10This major spending package, now headed for the President's signature,

00:13includes a slew of proposals that will fundamentally alter how Americans take out and pay off their student debt.

00:19These are being replaced with just two less generous options.

00:23The first, the Repayment Assistance Plan,

00:26will set payments at 1% to 10% of income, with a $10 minimum.

00:31While the Parent PLUS program remains, it now comes with a $65,000 lifetime cap.

00:37While it waives unpaid interest, loan forgiveness only occurs after 30 years.

00:42However, borrower advocates and Democratic lawmakers, including Senator Elizabeth Warren,

00:48argue that these changes will lead to higher student loan payments

00:51and deepen financial insecurity for millions of Americans.

00:54The legislation also aims to increase college accountability.

00:58With programs where graduates do un-earn more than the median high school graduate in their state

01:03losing federal student loan eligibility,

01:05it also extends Pell Grant eligibility to shorter-term programs.

01:09This is a notable departure from SAVE,

01:11which offered forgiveness after 10 years for lower original balances

01:15and reduced undergraduate loan payments.

01:17Borrowers currently on SAVE will have a window between July 2026 and July 2028

01:23to transition to a new plan.

01:26One of the most impactful changes is the elimination of existing income-driven repayment plans,

01:32including the popular SAVE plan.

01:34The second option is a new standard repayment plan,

01:37offering fixed payments over 10 to 25 years,

01:40with the period varying based on the original loan balance.

01:43Beyond repayment, the bill also eliminates borrowers' ability to defer payments due to economic hardship

01:49or unemployment, leaving only standard forbearance as a delay option.

01:54Furthermore, the bill significantly impacts new loans.

01:58It eliminates the Graduate Plus program,

02:00which allowed graduate students to borrow up to the full cost of attendance.

02:04Education Secretary Linda McMahon has praised the bill,

02:07calling it truly beautiful for simplifying the repayment system

02:10and curbing rising tuition costs by reducing federal borrowing amounts.

02:15Money expenses.

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