Advocates are sounding the alarm that monthly payments for federal student loans are about to spike. Starting on July 1, the Education Department will begin implementing significant federal student loan reforms, including initiating a process to move borrowers out of the SAVE plan. The cumulative effect of these changes may yield higher payments for many borrowers.

“Sadly, within educational policy, a bad situation is about to become much worse,” said Senator Bernie Sanders (D-VT) in an email bulletin on Monday. “Starting July 1, the Trump administration will remove over seven million Americans, including hundreds in Vermont, from the country’s most affordable income-driven student loan repayment plan (known as the SAVE plan)." Sanders warned that payments are about to “skyrocket.”

Other major reforms are also set to take effect on July 1, including new rules for student loan forgiveness and repayment. But even as the Education Department moves forward with these plans, several lawsuits challenging some of the department’s actions are still pending. So, there is also some degree of uncertainty about what may lie ahead. Here’s what borrowers need to know.

Big Changes For Student Loans Take Effect Starting July 1

The Education Department is preparing to enact a slew of reforms to federal student loan programs starting on July 1. These changes are the culmination of legislative and regulatory updates, as well as court orders following legal challenges. The updates fall into three broad categories.

Changes To Student Loans Under One Big, Beautiful Bill Act

First, the department is set to enact new regulations on July 1 to implement the One Big, Beautiful Bill Act, which Republican lawmakers in Congress passed last year. The historic legislation will phase out several popular income-driven repayment plans, including PAYE and ICR, by 2028. The legislation also creates two new repayment plan options, the Repayment Assistance Plan (or RAP) which will be based on a borrower’s income, and a Tiered........

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