The U.S. student loan repayment system will undergo major policy changes on July 1, following a federal appeals court ruling in March that ordered the termination of the Biden-era Save repayment plan. These new policies stem from the Trump administration's One Big Beautiful Bill Act, which was signed into law in 2025.

More than 7 million Americans are currently enrolled in the Save repayment plan, which launched in 2023 as an income-based program under the Biden administration. Republican state attorneys general challenged the Save plan in federal court, leading to a pause on monthly repayments, and borrowers enrolled in the plan have been in forbearance since July 2024.

Starting July 1, loan servicers will send notifications to Save borrowers, providing a 90-day window to select a new repayment plan. If Save borrowers do not choose a new plan, they will be automatically placed into a standard fixed-income plan that requires 120 equal payments over 10 years. Borrowers with loans issued before July 1, 2026, who do not take out additional loans, will retain access to existing repayment options. The PAYE and ICR plans are scheduled to be phased out by the summer of 2028.

Borrowers who take out new federal student loans on or after July 1 will only have access to the Repayment Assistance Plan (RAP) or the tiered standard plan. Under RAP, monthly payments are calculated as a percentage of a borrower's adjusted gross income, with rates ranging from 1% to 10% for incomes above $10,000. Loans enrolled in RAP are eligible for forgiveness after 30 years of payments. The tiered standard plan requires fixed monthly payments starting at a minimum of $50, with repayment terms between 10 and 25 years based on the loan balance.

Nicholas Kent, under-secretary of education, said, "For years, borrowers have been caught in a confusing cycle of uncertainty, but the Trump administration's policy is simple: if you take out a loan, you must pay it back." The Department of Education stated that the policy changes are intended to simplify the student debt system.

Natalia Abrams, president of the Student Debt Crisis Center, said, "I've worked in this space for more than 15 years, and I've never seen it this bad, and I've never seen it change this much, this frequently." She added, "It feels like this has been designed by people that do not understand the student loan system."

William Elliott, founding director of the University of Michigan's Center on Assets Education and Inclusion, said, "I ended up with debt for over 20 years. And every day you get up, you think about that debt. I mean, it's just an albatross around your neck. It affects your ability to begin to build wealth like you want. It is just something that is constantly there, destroying the sense of a return on degree for you."

Ryan Coryea, a senior at the University of California, San Diego, said, "For me as well as for a lot of my friends, it's really making us reconsider how we're going to pay for grad school, and also if we're going to go at all."