US student debt repayment system is being overhauled – here’s what to know

Northeastern students at graduation at the TD Garden in Boston. Photograph: Suzanne Kreiter/Boston Globe via Getty ImagesView image in fullscreenNortheastern students at graduation at the TD Garden in Boston. Photograph: Suzanne Kreiter/Boston Globe via Getty ImagesBusinessExplainerUS student debt repayment system is being overhauled – here’s what to knowBorrowers face stricter payment timelines after Biden-era Save repayment plan was ended by Donald Trump

The American student loan repayment system is set to undergo a significant overhaul next month, changing the way millions of borrowers pay off their debt.

The series of changes, which take effect 1 July, are a result of the Trump administration’s One Big Beautiful Bill Act that was signed last summer and a recent court ruling that ordered the end of the Biden-era Save repayment plan. Borrowers will be facing stricter payment timelines and less forgiveness, what will be the latest in a series of massive changes to the student loan system in just a few years.

“This is impacting, in my opinion, every single student loan borrower in one way or another – even if you don’t have to make a change in your loans, just the confusion alone,” said Natalia Abrams, the president of the Student Debt Crisis Center.

“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.”

Here’s a rundown of how the repayment system is changing and how it is affecting students.

More than 7 million Americans are enrolled in the Save plan, an income-based repayment plan launched in 2023 by the Biden administration. The program was created with the goal of drastically reducing undergraduate loans, eliminating monthly payments for some, and offering early forgiveness for borrowers with low-balances.

After a federal appeals court ruling in March, the Save plan will be official dismantled 1 July. The ruling came after Republican attorneys general across the country challenged the plan, putting monthly repayments on hold for years.

On 1 July, monthly repayments will start again and Save borrowers will soon have to apply for a different payment plan.

Once the Save plan officially ends, borrowers will have 90 days tochoose a different repayment plan.

Borrowers with loans issued before 1 July 2026 – and who do not plan to take out more loans – will retain access to several existing income-driven payment and fixed-income plans.

Compared to plans offered under the Biden administration, these plans push borrowers to pay back their loans more quickly and include less forgiveness options.