Latest News About Loans
Loan policies and repayment plans have seen significant recent changes, especially concerning federal student loans. Borrowers face new challenges as interest rates and repayment structures evolve rapidly under shifting government regulations. This article explores the latest updates on student loan interest resuming, new repayment assistance programs, and legislative reforms impacting borrowers nationwide.
Interest Resumption and the Transition from the SAVE Plan
Effective August 1, 2025, millions of borrowers who were enrolled in the Biden Administration’s Saving on a Valuable Education (SAVE) Plan now face the resumption of interest accrual on their federal student loans. The SAVE Plan, previously intended to offer zero percent interest and easy payment terms for lower-income borrowers, was deemed illegal by federal courts. Consequently, interest that was paused during the plan’s duration has begun compounding again, causing monthly payments to increase dramatically for some borrowers—by as much as $300 in certain cases.
Borrowers are being urged to switch to legally compliant repayment plans as the Department of Education initiates outreach to approximately 7.7 million affected individuals. New plans, such as the Repayment Assistance Plan (RAP), are expected to launch in 2026 under legislation passed during the Trump Administration. RAP aims to provide a more sustainable repayment structure where monthly payments are calculated based on borrowers’ adjusted gross income, with minimum payments starting at $10 for very low earners. However, RAP may lead to higher payments for some compared to SAVE, placing an emphasis on borrower education and proactive management of loan balances to avoid further accumulation of interest.
Legislative Reforms and New Borrower Protections
The broader recent domestic policy bill, known colloquially as the “One Big Beautiful Bill,” introduces substantial federal student loan reforms. Among these is the elimination of the Grad PLUS program, imposing aggregate borrowing caps—$100,000 for graduate students and $200,000 for professional students—in addition to undergraduate loan limits. The bill also caps Parent PLUS loans at $65,000 per student.
Another critical reform requires educational programs to meet new income benchmarks relative to state medians to maintain eligibility for federal loan participation. This is designed to prevent federally subsidized loans from funding programs with poor employment or earning outcomes for graduates.
Furthermore, new repayment procedures such as RAP replace unemployment and economic hardship deferments with income-based minimum payments, enhancing fiscal responsibility while ensuring borrowers contribute toward loan repayment, even during low-income periods.
These changes mark a significant shift toward tightening loan eligibility and repayment parameters. Borrowers are advised to stay informed about their options and prepare for potentially higher payments as the combined effects of reinstated interest and revised repayment policies take hold.
In summary, recent developments in loan policies reflect a transition from suspended interest under contested programs like SAVE to more regulated, income-based repayment frameworks under RAP. Legislative reforms have introduced borrowing caps and eligibility rules aimed at protecting both borrowers and taxpayers. Navigating these changes requires borrowers to stay proactive and informed to manage their loans effectively in an evolving financial landscape.
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