What you need to know about student loan changes

Federal student loan borrowers saw major changes starting Wednesday, when several parts of President Donald Trump’s One Big Beautiful Bill Act took effect.

The new law changes how much some people can borrow and repay.

Some borrowers, especially those with lower incomes, could see their monthly loan payments increase. New graduate and professional students will face lower borrowing limits, capped at $100,000 over the course of a program, down from $138,500. At the same time, annual limits for professional degrees, including medicine and law, will increase from $20,500 to $50,000.

A plan to exclude fields like nursing and accounting from the increase is on hold amid legal challenges.

Parents using federal loans to help pay for their children’s college costs will also be able to borrow less. Borrowing will be capped at $20,000 per year and $65,000 in total.

Changes to repayment options
The law, signed by Trump in July, introduces a tiered standard repayment plan and a new Repayment Assistance Plan (RAP).

Repayment terms under the standard plan will range from 10 to 25 years, with higher-balance borrowers receiving longer timelines and smaller monthly payments.

Under RAP, monthly payments will range from 1% to 10% of income, with a minimum of $10.

Experts say some borrowers could pay more under RAP than under current income-driven plans.

These changes apply only to new loans for the next two years.

Existing borrowers won’t see immediate changes, but most current repayment plans, including ICR and PAYE, will be phased out in July 2028. Borrowers will then be required to move to RAP (the new standard plan) or to Income-Based Repayment.

Discount for auto pay
Borrowers who enroll in automatic payments by September 30 will receive a 1 percentage-point interest rate discount through June 2028.

Meanwhile
Earlier this week, two federal judges blocked a Trump administration rule that would have narrowed eligibility based on an employer’s activities.

The administration sought to redefine a “qualifying employer” by excluding organizations it considered to engage in unlawful activities.

District Judge Amir Ali ruled that the Department of Education cannot rewrite eligibility rules established by Congress, while District Judge Myong Joun concluded the regulation violated federal law and the First Amendment. The Department of Education said it is evaluating its next steps.