Student loan update: Full list of rule changes coming in July

Key Points:

• Starting July 1, millions of Americans with federal student loans will face major changes in borrowing, repayment, and forgiveness due to new federal regulations under President Trump's One Big Beautiful Bill Act.
• A new Repayment Assistance Plan (RAP) will replace existing income-driven plans, requiring minimum monthly payments based on income and offering forgiveness after 30 years, but potentially increasing long-term borrowing costs.
• The Biden-era SAVE repayment plan will end, forcing around 7 million borrowers to switch plans or be moved to a standard repayment option, likely resulting in higher monthly payments for many.
• New borrowing limits will cap Parent PLUS loans at $20,000 per year and $65,000 lifetime, and graduate student loans at $20,500 annually with a $100,000 lifetime cap, leading some to seek private loans with higher interest rates.
• Changes to Public Service Loan Forgiveness include stricter employer eligibility criteria, and a new 1% interest rate reduction incentive will be available for borrowers enrolled in auto-pay through June 30, 2028.