New federal student loan rules cut borrowing and repayment options

Millions of federal student loan borrowers lost repayment choices as the new rules took effect Wednesday, narrowing the system from seven plans to two and forcing borrowers in SAVE to move into a legal federal repayment option. Families taking out Parent PLUS loans and students depending on federal borrowing now face tighter limits and fewer ways to keep monthly bills manageable.

The overhaul comes under the One Big Beautiful Bill Act, which President Donald Trump signed into law on July 4, 2025. Some provisions began this summer and others will phase in over subsequent years, but the core reset is already underway for current borrowers and new students entering the system.

The Education Department has sent guidance to 7.5 million borrowers enrolled in SAVE, directing them to leave that plan and move into a legal federal repayment plan. Those notices began going out in March 2026, and borrowers should keep contact information current and make sure they can log into StudentAid.gov, because deadlines and account notices are arriving now. The new Repayment Assistance Plan will be available starting July 1 for borrowers with new student loans.

The law reduces repayment options from seven to two, and plans including SAVE, PAYE, IBR and ICR are being phased out. For borrowers who used those plans to lower payments during periods of job loss, family leave or other financial strain, the new structure leaves fewer off-ramps and less flexibility to adjust a bill that can already consume a large share of take-home pay.

The Congressional Budget Office estimated that the repayment changes in the law will reduce federal outlays by $270.5 billion over fiscal years 2025 through 2034.