Trump Overhauls $1.7 Trillion Student Loan System, Ending SAVE for 7 Million Borrowers
Updated
Updated · NBC News · Jun 28
Trump Overhauls $1.7 Trillion Student Loan System, Ending SAVE for 7 Million Borrowers
3 articles · Updated · NBC News · Jun 28
Summary
Wednesday’s overhaul will cut federal repayment choices to two new plans for new borrowers, scrap Biden’s SAVE program and tighten loan limits across the federal student lending system.
More than 7 million SAVE enrollees will have at least 90 days to switch plans, but many lower-income borrowers face higher monthly bills and resumed payments after a long pause; one borrower estimated a jump to $713 from $150.
New rules require some borrowers to pay for up to 30 years before cancellation, cap lifetime federal borrowing at $257,500, and shift student aid administration from the Education Department to Treasury.
Interest rates are also rising to 6.52% for unsubsidized undergraduate loans and 8.07% for graduate loans, though borrowers who enroll in autopay by Sept. 30 can get a temporary 1% rate cut.
The changes hit a market with nearly 43 million borrowers owing $1.7 trillion, after 2.6 million more fell into default in the first quarter, deepening concerns that stricter terms could push more borrowers into delinquency or out of higher education.
As new federal loan caps take effect, will higher education become financially out of reach for many aspiring students?
With student loan payments set to spike, what is the best financial strategy for borrowers facing the new repayment system?
With the Treasury managing student debt, what new collection powers will it use on millions of borrowers in default?
July 2026 Student Loan Shakeup: New $257,500 Borrowing Limit, Repayment Plan Changes, and What Borrowers Must Do Next
Overview
Starting July 1, 2026, the federal student loan system will undergo a major overhaul with the One Big Beautiful Bill Act. The SAVE repayment plan, which currently supports over 7 million borrowers, will end, requiring those enrolled to take urgent action. This change is part of a broader effort to reduce federal loan costs, with the new Repayment Assistance Plan (RAP) expected to help save $271 billion over the next decade—$150 billion of which will come from higher repayments by existing borrowers. Borrowers must understand their new options and act quickly to avoid higher payments.