What Trump’s Student Loan Changes Mean for Borrowers

One of the most controversial actions the Trump administration is planning is cancelling the Saving on a Valuable Education (SAVE) plan.

SAVE was initially introduced by the Biden administration back in 2023. It was created with the intention of cutting undergraduate loans in half. Students on lower incomes were eligible for reduced monthly payments, as low as $0. Those on SAVE could also have their loans forgiven after 20 or 25 years.

The Trump administration argued that taxpayers incurred huge costs as a result of SAVE and claimed it was an overstep of executive power.

Secretary of Education Linda McMahon said that student aid will be better managed, claiming that borrowers will receive “the high-quality service they have come to expect under the Trump administration.” In March, the federal appeals court ruled to abolish SAVE, putting the 7 million people on this plan into jeopardy.

People previously on SAVE will have 3 months from July 1st to switch their plans. Those who don’t switch their repayment plans within the 90-day window will be automatically placed onto a Standard plan, which will incur much higher repayments.

What are the repayment plan options for people who were on SAVE?

Borrowers who were previously on the SAVE plan will be able to choose another income-driven repayment (IDR) option based on their income and family size. The other choices include: 1

All of these plans are also eligible for the Public Service Loan Forgiveness (PSLF) program, which forgives the remaining balance on federal loans for those who work full-time in public service, as long as they make payments over a period of 10 years.

However, the government plans to eliminate the PAYE and ICR plans after July 1, 2028.

Abolishing the SAVE plan is just one of the many changes the Trump administration is planning on July 1st.

The government is also introducing new plans aimed at lower-income borrowers and limiting how much students actually borrow.

New federal student loan plans

While SAVE and two other plans for lower-income students will be eliminated, the government is also introducing two new options after July 1st:

• Tiered Standard plan: This plan won’t be based on how much you earn or are able to pay. Instead, borrowers on this plan will be required to make fixed repayments over a period of 10 to 25 years, depending on the balance. Moreover, payments made on this plan also won’t count toward student loan forgiveness as part of the PSLF program.
• Repayment Assistance Plan (RAP): This functions similarly to the previous plans for lower-income individuals. With RAP, monthly payments will be calculated based on the borrower’s income and family size. RAP will also have an interest subsidy that is intended to prevent balances from growing too large.

While RAP aims to assist individuals on lower incomes, those on this plan will face much higher repayments than with SAVE. For example, on SAVE, single borrowers without children earning $30,000 annually paid nothing in monthly repayments.

On RAP, those borrowers will need to pay $50 a month. All borrowers will also have to make a minimum monthly payment of $10, regardless of their income. 2

Moreover, RAP’s deductions based on family size will be far less generous. Only $50 per dependent will be deducted from monthly payments. 3

New limits on student borrowing

It isn’t just those already making repayments who’ll be affected by these changes. Current and prospective students who plan on taking out new federal loans will also face new caps and limitations.

In a fact sheet released in April 2026, the Department of Education outlined the new borrowing limits that will come into place on July 1st: 4

• Graduate student loans: Capped annually at $20,500 (aggregate cap of $100,000)
• Professional student loans: Capped annually at $50,000 (aggregate cap of $200,000)
• All student loans received on or after July 1st: Subject to an aggregate lifetime loan limit of $257,500

The fact sheet also stated that parents borrowing through the Parent PLUS program (available to the parents of dependent students) will be limited to $20,000 a year, with an aggregate cap of $65,000 per dependent.

Proposed restrictions on student loan forgiveness

On top of the changes to the federal student loan plans, the government also plans to give the Secretary of Education the authority to disqualify organizations from participating in PSLF. Any organization that is deemed to have a “substantial illegal purpose” could be targeted.

The Trump administration claims that these new rules protect taxpayers and give the PSLF program more integrity. But critics argue that these new rules would give the Trump administration the power to exclude groups that haven’t complied with them.

They claim nonprofit organizations or Democratic-led states that are pushing DEI initiatives or haven’t cooperated with the government on issues like immigration enforcement could be at risk.

The Trump administration’s planned changes to federal student loans have been met with fierce opposition since they were first announced last year.

Rachel Gittleman, president of the American Federation of Government Employees Local 252, which represents more than 2,000 current and former education department workers, was particularly critical.

“This isn’t efficiency,” she said in a statement. “Secretary McMahon is creating confusion, eroding public trust, and harming students and families.”

Many users on Reddit share these concerns. In a post on the subreddit r/Lawyertalk, one user who reportedly graduated from law school in 2013 said that they “went into a state of shock” when they realized how Trump’s amendments would affect them.

“I now owe a lot more than I did when I graduated,” they said. “Basically, I realized, one moment to the next, that I have a $300,000 high-interest debt that must be repaid as quickly as possible because the interest is making it grow at like $50 a day.”

In another post on the subreddit r/StudentLoans, users were equally worried. “I’ve done nothing but follow what they told me to pay, and I owe $100k more now than when I started,” said one user. Another Redditor who claims they were previously on SAVE said their payments “will increase to $170–$200+ per month,” under the new plans they qualify for.

The challenges for healthcare sector workers

Some of the most vocal critics against these changes come from the healthcare sector. Renee Endicott, a nurse practitioner based in Harrisonville, Kansas, told KSHB last year that these changes “will limit the pool of people who can afford to become providers and even nurse educators.”

Plaintiffs representing 24 states and the District of Columbia filed a lawsuit against the Trump administration in May 2026, claiming that these changes would impact healthcare sectors. In a written statement, New York Attorney General Letitia James said this rule “will shut talented people out of critical professions and leave communities with fewer healthcare providers they desperately need.”

“We cannot afford fewer nurses, fewer providers, or fewer opportunities for working people to enter these essential fields,” she said.

Two physician associate groups, the American Academy of Physician Associates (AAPA) and the Physician Associates Education Association (PAEA), have also filed a lawsuit against the government in response to the proposed caps on borrowing for graduate loans. In a written statement, Lisa Gabels, CEO of the AAPA, said the ruling would have “devastating consequences” for physician associates and assistants (PAs).

“PA programs meet every element of the professional degree definition that Congress established in law,” she stated. “They award entry-level master’s degrees, require rigorous clinical training, and lead to professional licensure in all 50 states.”

Millions of Americans are dealing with student loan debt. According to the Education Data Initiative, the outstanding federal student loan balance is $1.693 trillion. That translates to 42.8 million borrowers dealing with student debt. 5

PBS reported that about 3.4 million Americans were more than 270 days late on a loan payment at the end of last year. With the upcoming changes to repayment plans, borrowers may struggle even more to pay back their student loans.

The challenges for healthcare workers’ careers

On top of making repayments more challenging for borrowers, experts say that these changes will prevent many healthcare workers from advancing in their careers. Under the new rules, the government will limit what graduate degrees are deemed as “professional.” Only graduates enrolling in degrees defined as professional are able to borrow up to $50,000 a year.

As part of these changes, nursing, physical therapy, and nurse anesthesia programs will not be deemed professional. The American Nurses Association said it was “profoundly dismayed” when the government finalized the rule change in April.

“This Department of Education has chosen to make it harder for nurses to advance their education and their careers,” Jennifer Mensik Kennedy, president of the American Nurses Association, said in a statement. “This rule will be felt in real communities, for example, in rural areas where nurse practitioners, midwives, and nurse anesthesiologists are often the only providers of core care services.”

Ripple effects on the gig economy

With many lower-income borrowers facing higher monthly repayments, one full-time job may no longer be enough to make ends meet. Americans are increasingly starting side hustles to get out of debt. A survey from Zety last year found that 38% of respondents started side hustles or took on a second job to keep up with their debts.

The trend of using income from side gigs just to make ends meet has only been getting worse. A survey from SideHustles.com found that most people use side hustles just to cover basic expenses, like groceries or other household essentials.

Unfortunately, in the current market, even finding a side hustle can be difficult. The US is in the midst of mass layoffs, and many firms are pushing to automate entry-level jobs previously reserved for fresh grads. While the government claims they’re improving the student loan repayment system, a huge portion of graduates are having their lives disrupted.