Major updates to the U.S. federal student loan system take effect on July 1, 2026, under the One Big Beautiful Bill Act.
The updates overhaul borrowing caps, eliminate the SAVE plan, and introduce a new income-driven payment framework, along with cutting short-term interest rates.
"What is currently in place, the Biden-era SAVE Plan, is being replaced with the RAP Plan (Repayment Assistance Plan). And after July 1st, there will only be two plans available," said Jeff Boron with SendYourKidstoCollege.org.
New federal student loan interest rates just came out. The new rate for undergraduates is 6.52%. It's 8.07% for graduate students. The new rates are an increase of about a quarter of a percent.
"If you have a student loan, you should go on StudentAid.gov, and check out the kind of student loan you have.It may be phased out. You will have 90 days to make a change. After 90 days, they'll force you into one of the new programs, whether you like it or not. All of the information is on the student loan portal. There are tools that you can use to see what will happen to your payment," he explained.
Boran added that the repayment plans are mostly income-based. Everyone under the new plan will have a minimum payment around $50 dollars a month.It is income based, so the more you make, the higher the payment.
"After July 1st, there will only be two plans available" - Jeff Boron
"After July 1st, there will only be two plans available" - Jeff Boron
