MARTIN, TENN. — Changes to federal student loans took effect on July 1 as part of President Donald Trump's “One Big Beautiful Bill Act.” The federal loan changes eradicated the SAVE repayment program and eliminated Graduate PLUS loans for new borrowers.

Parent PLUS loans for new borrowers are capped at $20,000 per year with a lifetime limit of $65,000 per student. The administration stated the changes intended to reduce student loan debt by preventing overborrowing.

Graduate students who previously relied on Graduate PLUS loans must now use direct unsubsidized loans. Direct unsubsidized loans for professional programs are capped at an annual amount with a lifetime cap. Students pursuing professional degrees such as law or medicine can borrow up to the annual maximum under the new rules. Students pursuing professional degrees have a lifetime loan limit under the new rules.

“It can be a big change for graduate students,” said Destin Tucker, assistant vice chancellor of enrollment management at the University of Tennessee at Martin. “Our continuing students — who are used to their loans paying out in a different way — may be taken off guard.”

Mark Smith is the Financial Aid Director at West Kentucky Community and Technical College. “To get the full amount of the student loans that they're eligible for, they're going to have to take 12 credit hours each semester and be successful in those credit hours as well — like fully attend, not drop or fail,” Smith said. “So, that's the biggest difference.”

“The alphabet soup that used to be there is off the menu,” said Barry Bigelow, a financial expert. “If you’re taking out new loans after July 1st, you have two repayment options.” Borrowers taking out federal loans after July 1 can choose a Tiered Standard Plan with fixed payments spread over 10 to 25 years based on loan balance. Borrowers can also choose the Repayment Assistance Program (RAP), which caps monthly payments at 1% to 10% of adjusted gross income. Under the Repayment Assistance Program (RAP), any remaining balance is forgiven after 30 years.

“Legacy income plans have the ability to stay grandfathered until July of 2028,” Bigelow said. “You have two years to really look at your situation and make decisions on consolidation and repayment.”