Trump student loan overhaul begins July 1 amid court blocks

On July 1, the U.S. Department of Education implemented a sweeping overhaul of the federal student‑loan program announced by the Trump administration. The changes replace the Biden‑era SAVE repayment plan with two new options – the Repayment Assistance Plan (RAP), which caps monthly payments at 1‑10 % of income, and a tiered Standard repayment plan with terms of 10 to 25 years. Borrowers in the former SAVE plan have 90 days to select a new plan, after which they will be placed in the standard plan if they do not act.

The overhaul also imposes new borrowing caps: graduate students may borrow up to $20,500 per year ($100,000 lifetime), professional students up to $50,000 per year ($200,000 lifetime), and Parent PLUS loans are limited to $65,000 lifetime. The Grad PLUS loan program is being eliminated for new borrowers. The Department says the reforms simplify repayment and curb excessive borrowing, but advocates warn they will raise monthly payments for many low‑income borrowers and could restrict access to graduate education.

Separately, two federal judges issued injunctions blocking a Trump‑era rule that would have narrowed eligibility for the Public Service Loan Forgiveness (PSLF) program. The judges ruled the rule exceeded the Education Department’s authority and threatened First‑Amendment rights. The injunctions preserve the existing PSLF rules while litigation continues.