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How the federal student loan changes could impact borrowers
PBS • • business
Key Points:
- Starting July 1, federal student loans will see major changes including higher interest rates, stricter borrowing caps, and fewer loan forgiveness options, impacting millions of borrowers.
- The Biden-era SAVE Plan, which helped 7.5 million borrowers with low or zero monthly payments, will be eliminated and replaced by new repayment plans requiring at least a $10 monthly payment, potentially increasing financial strain for low-income borrowers.
- A new 1 percent interest rate discount for borrowers enrolling in autopay is available but only for two years, offering some savings primarily for those with larger loans or higher interest rates.
- Experts warn the changes could lead to increased loan defaults and delinquencies, especially among low-income borrowers who may struggle with the new payment requirements amid rising living costs.
- Loan forgiveness programs remain available, particularly for public servants and through income-driven repayment plans with forgiveness after 20-30 years, but these options are less generous than previous plans like SAVE.
