Trump is kicking off sweeping changes to student-loan repayment

• The Department of Education is beginning to roll out the student-loan repayment changes from Trump's spending bill.
• They include changes to eligibility for income-based repayment plans and new borrowing limits.
• The bill also creates two new income-driven repayment plans, which won't be implemented until July 1, 2026.

Student-loan borrowers will soon start seeing changes to the way they borrow and pay off their loans.

After President Donald Trump signed into law his tax and spending bill, which included major changes to student-loan repayment, the Department of Education announced it was beginning to implement some of the new provisions.

The department wrote in a July 18 letter that "many" of the changes in the spending law will be implemented on July 1, 2026, including the creation of two new income-driven repayment plans. However, the department said it is working with student-loan servicers to roll out a series of changes before then:

• No longer requiring borrowers to have partial financial hardship to qualify for an income-based repayment plan;
• Expanding options for borrowers who took out parent PLUS loans to enroll in an income-based repayment plan;
• Reducing the amount a student can borrow if they're enrolled in a program that is not full-time;
• And delaying the implementation of former President Joe Biden's borrower defense to repayment and closed school discharge regulations.

If a borrower believes they were defrauded by the school they attended, they can apply for borrower defense, and if their claims are approved, their loans will be forgiven. Biden's administration attempted to make the process easier for borrowers to navigate, but it was blocked in court and never implemented.

Acting Undersecretary James Bergeron said in a Friday statement that Trump's spending bill "delivers for student borrowers in a big way — simplifying the student loan repayment system, funding the $10.5 billion shortfall in Pell Grant funding left by the previous administration, supporting short-term career focused programs that train workers for in-demand jobs, and holding colleges accountable by eliminating student loan eligibility for programs that leave students worse off than if they had never enrolled."

"Today's announcement is the first step in the implementation process, and we look forward to building the President's vision for education and training beyond high school," Bergeron said.

The department's letter also said that it is amending the Public Service Loan Forgiveness program, which forgives student debt for government and nonprofit workers after 10 years of qualifying payments, to allow payments made under a new income-driven repayment plan to count toward forgiveness.

Trump's spending bill eliminates existing income-driven repayment plans and replaces them with two options: a standard repayment plan and a new Repayment Assistance Plan, which sets borrowers' monthly payments at 1% to 10% of their income, with any remaining balance forgiven after 30 years.

The options are less generous than the SAVE plan, which the bill eliminates. SAVE would have allowed for cheaper monthly payments with a shorter timeline to debt relief. The department announced on July 9 that interest charges will restart on the balances of the 8 million borrowers enrolled in the SAVE plan.

The department said more information on changes to repayment from the spending bill will be announced in the coming weeks and months. They come as the administration is working to dismantle the Department of Education; the Supreme Court ruled on July 14 that Trump can proceed with firing department staff.