Trump’s Big Ugly Bill just raised your student debt but don’t worry, his kids never needed loans

A major change to the federal student loan system has been put into place, affecting almost 43 million borrowers in the United States. Thanks to Trump’s Big Beautiful Bill, there are new changes that include stricter borrowing limits and far fewer repayment choices.

One of the biggest and most immediate changes for current borrowers is the end of the Biden-era Saving on a Valuable Education (SAVE) plan. According to NPR, this plan, which was popular for its low monthly payments and faster loan forgiveness, has been tied up in legal battles, leaving it in uncertainty.

Starting August 1, borrowers signed up for SAVE will see their loan balances grow again because interest will start adding up. While monthly payments aren’t required yet due to ongoing court orders, the growing interest will likely push many borrowers to look for other repayment options instead of watching their debt increase. The Education Department has said the SAVE plan will officially close by July 1, 2028, meaning all borrowers using it will have to switch to a different plan by that date.

Trump’s new law will make you pay more in student loans

The sudden news about interest starting up again is expected to cause a rush of activity for the Education Department. Some worry this could lead to delays, especially since the department has recently cut staff. On top of that, the two new repayment plans created by the new law won’t be ready for another year, making things even more confusing for borrowers trying to figure out their next steps. The department’s official website, which is supposed to help borrowers understand their options, hasn’t been fully updated to show these new changes yet.

Beyond current repayment options, the new law sets strict borrowing limits for future loans, starting July 1, 2026. Undergraduate students won’t see any changes to their loan limits. But graduate students and parents will face tighter restrictions.

The current grad PLUS loan, which lets graduate students borrow up to the full cost of their program, will be gone. Instead, graduate students will be limited to borrowing $ 20,500 per year, with a total lifetime limit of $100,000. This is a big drop from the previous lifetime limit of $138,500 and is expected to affect about 20% of master’s students who currently borrow more than these new limits.

For those in professional graduate programs, like medical or law school, yearly borrowing will be capped at $50,000, and their lifetime limit will go up from $138,500 to $200,000. Parents and caregivers using parent PLUS loans to pay for their children’s education will also face new rules, with a yearly limit of $20,000 and a total limit of $65,000 per child.

Data shows that about one-third of parent PLUS borrowers with dependent children currently take out more than this new yearly cap. The law also creates a new combined lifetime limit for both undergraduate and graduate loans, set at $257,500 per person.

For current borrowers who took out loans before July 1, 2026, an older plan called Income-Based Repayment (IBR) will still be available. IBR was created by Congress and is written into law, so it won’t go away. Under IBR, payments for loans taken before July 2014 are capped at 15% of discretionary income, with forgiveness after 25 years.

For loans taken after July 2014, payments are capped at 10% of discretionary income, with forgiveness after 20 years. While RAP might offer lower monthly payments for many lower and middle-income borrowers, IBR could still be a good choice for those with older loans getting close to their 20 or 25-year forgiveness deadlines.