Major changes to federal student loans are taking effect, impacting borrowers nationwide. The changes, part of President Donald Trump’s One Big Beautiful Bill Act, aim to simplify repayment options and improve the federal student lending system.
New Repayment Plans
The law introduces a new tiered standard repayment plan and a Repayment Assistance Plan (RAP). Under the standard plan, borrowers will have between 10 years and 25 years to repay their loans, depending on the amount borrowed. The RAP plan will base monthly payments on the borrower’s income, ranging from 1% to 10% of their earnings, with a minimum payment of $10 per month.
Borrowers with dependents will receive a $50 reduction in their monthly payments for each dependent, and any remaining balances will be canceled after 30 years of payments. However, some borrowers may pay more under RAP than under current income-driven repayment options due to the plan’s structure.
Loan Limits
New limits are being imposed on graduate school students, who will no longer be able to borrow up to the full cost of attendance. The new limits are $20,500 annually and $100,000 over a lifetime. Professional and graduate students will face stricter loan limits, with a cap of $50,000 annually and $200,000 over their lifetime.
Parents who take out Parent PLUS loans to help their undergraduate students will be limited to $20,000 annually and $65,000 total. However, parents of currently enrolled students can still borrow up to the cost of attendance until their child completes their program or for up to three academic years, whichever comes first.
Borrowers who sign up for automatic payments by September 30 will receive a one percentage-point break on their interest rates. The interest rate for undergraduate loans will increase to 6.52%, and to 8.07% for graduate loans.
Original reporting: KRDO (Colorado Springs metro) — read the source article.
