Sweeping federal student loan changes take effect on July 1, impacting repayment plans, graduate borrowing limits, and Parent PLUS loans. Because the SAVE plan is phasing out and automatic adjustments could place you on a higher-payment standard plan, you must take immediate action to protect your current borrowing and repayment status.
Step 1: Verify Your Current Repayment Plan.
The Saving on a Valuable Education (SAVE) plan is being phased out. Log in to your Federal Student Aid Dashboard immediately to check your current plan. If you are enrolled in SAVE, you may have as little as 90 days after July 1 to choose a new income-driven plan before being automatically shifted to a less favorable standard tier.
Step 2: Compare Your New Repayment Options.
New borrowers—and those whose plans are rolled over—will have to choose between a Tiered Standard Plan (fixed payments over four possible time frames) and the new Repayment Assistance Plan (RAP), which considers your Adjusted Gross Income (AGI). Compare these plans on the Federal Student Aid (FSA) portal to see which results in a more manageable monthly payment.
Step 3: Identify and Contact Your Loan Servicer.
Find out exactly which company services your loan (e.g., MOHELA, Nelnet, Aidvantage, or EdFinancial) and download your complete loan history. If you have been relying on deferment protections for economic hardship, note that these protections are being phased out for brand-new loans taken out after July 1.
Step 4: Act Quickly on Parent PLUS Loans.
The rules for Parent PLUS loans are tightening severely. Parents are now capped at borrowing $20,000 per student per academic year, with a $65,000 lifetime limit per dependent. If your parents were considering utilizing a Parent PLUS loan, they should finalize their applications or consider private loan options before the July caps take effect.
Step 5: Plan for New Graduate & Professional Loan Limits.
If you are pursuing an advanced degree, the Grad PLUS loan program has been eliminated, and strict borrowing caps have been implemented. Graduate loans are now capped at $20,500 per year ($100,000 aggregate). Professional degree students (e.g., JD, MD, PharmD) are limited to $50,000 per year with a $200,000 lifetime limit. You will need to re-evaluate your funding gaps and potentially look into scholarships or private financing.
Step 6: Consolidate Existing Loans Carefully.
Be highly strategic about consolidating. Direct Consolidation Loans processed on or after July 1 will be treated as entirely brand-new loans. Consolidating might mean losing access to legacy repayment plans, deferment options, and Public Service Loan Forgiveness (PSLF). Ensure you speak with your loan servicer to understand if consolidation will hurt your current loan perks.
If you want me to help you navigate these changes, please tell me:
- What is your current repayment plan?
- Are you currently a graduate student, an undergraduate, or a parent borrowing for your child?
- Are you pursuing Public Service Loan Forgiveness (PSLF)?
I can help you strategize your next move to avoid a surprise spike in your monthly bills.
