When President Trump signed his “Big Beautiful Bill” into law, the massive budget bill reorganized the federal student loan borrowing structure in a way that will affect both borrowers and institutions of higher learning.
For some borrowers, the new plans have come with an unwelcome sticker shock.
Currently, borrowers have multiple repayment options, but with the new federal student loan policy, fewer options will be available effective July 1, 2026.
“Now, borrowers are not required to make any changes yet, but if they do not make a change by July 1 of 2026, they will get automatically shifted into the Repayment Assistance Plan,” said Logan Warmund, a certified student loan professional.
While some experts predict the reorganized loan policies to have negative consequences for borrowers, Warmund said the change provides clarity and consistency.
“Now, payments are probably going to be going up for most borrowers, but I think a lot of borrowers were very scared when this first came out and it's not as bad as what it really looks like,” Warmund said.
The Repayment Assistance Plan, which has similar characteristics as the Saving on a Valuable Education (SAVE) plan, keeps federal loans borrowers from experiencing runaway interest that make it nearly impossible to pay down their loan.
A federal loan limit for parent borrowers, professional and graduate students is one of the most drastic changes of the restructured policy. This could force students to take out more in private loans, or cause them to rethink their career or school choice.
But Warmund said the change could potentially force institutes of higher learning to reel in the high costs of education.
The U.S. Department of Education is faced with processing backlogs, so Warmund advises current and future borrowers begin looking at their options.
“I think a lot of borrowers that aren't planning proactively are going to get greeted with a very large student loan payment,” he said.
- Logan Warmund, certified student loan professional, Reliant Financial Services
