How you borrow, pay off student loans may change on July 1: What to know

(NEXSTAR) — If you owe back federal student loans, or are hoping to get some soon, you could be impacted by the widespread changes rolling out on Wednesday that cut back on repayment options and cap borrowing limits.

More specifically, on July 1, the Biden-era Saving on a Valuable Education plan (better known as the SAVE plan) will end, limits will be imposed on how much graduate students and parents (through the Parent PLUS loans) can borrow in federal student loans, and a graduate borrowing program will end.

Whether you are a current borrower, a future borrower, or someone working to pay back their federal student loans, here’s what you need to know.

What’s happening to the SAVE plan?

The SAVE plan will essentially cease to exist on July 1, the Department of Education announced in December. Upwards of 7 million federal student loan borrowers were enrolled in the plan, which gave some monthly payments as low as $0.

Payments for those on the SAVE plan have been paused since July 2024 due to legal challenges, though interest has been accruing since August 2025.

On Wednesday, impacted SAVE plan borrowers are expected to be notified that they have a deadline to switch to a new repayment option. If they do not take action, they will automatically be enrolled in one of two new repayment plans: the Repayment Assistance Plan, a 30-year option which is also launching on July 1, and the Tiered Standard Plan, a standard option that gives loans a 10- to 25-year life span.

Either could increase monthly payments by hundreds of dollars. RAP and the Tiered Standard Plan will also be the only two plans available for those who take out loans after the plans launch on July 1.

There are two additional payment options – Pay........

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