Americans paying off federal student loans are facing lots of changes, including fewer options for settling their debt.
The Center Square reported that the new changes are the result of the One Big Beautiful Bill Act signed into law by President Donald Trump on July Fourth.
Included in the estimated 1,000-page piece of legislation designed to primarily cover permanent tax cuts and government spending reductions are provisions affecting federal student loans and how the government will manage their payment.
If the program were a commercial enterprise, it would be in serious trouble. Government reports indicate that as of January 2024, 43 million borrowers are in the federal loan program, with $1.5 trillion in total loans. The Government Accountability Office reported that only half of the borrowers are keeping up with their payments.
The Center Square reported that congressional supporters of the changes to the program said the government could save $278 billion in management costs over the next 10 years while making future borrowing and repayment easier.
Existing income-based repayment plans will be condensed into two new options: a standard plan with a fixed monthly payment or an assisted plan based on a borrower's income.
Limited time remains for borrowers to make choices and determine their best options. Borrowers on plans set to be eliminated have until July 2028 to switch to a new one, reported the Center Square.
New changes to federal student loan borrowing also include caps on total loan balances for post-college students and professional students, such as those in the legal and medical fields. Some changes affect borrowers who want to rehabilitate a defaulted loan.
Jim Mishler ✉
Jim Mishler, a seasoned reporter, anchor and news director, has decades of experience covering crime, politics and environmental issues.
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