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

Borrowers 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.