MERIDIAN, Idaho — Millions of Americans with student loans could see major changes to repayment plans and borrowing options starting July 1.
New federal student loan changes included in The Big Beautiful Bill are expected to reshape repayment plans and borrowing limits for millions of Americans.
James Smith, co-owner of Vitality Wealth, says while current borrowers may notice repayment changes, future students could face the biggest challenges.
WATCH what you need to know to get ready for student loan law changes
"But I think the biggest changes are for sure going to be on new borrowers in the future. So maybe it's a student who is looking at doing medical school in the future or dental school, even like law school," Smith said.
According to the legislation, several income-driven repayment plans are being phased out, including the SAVE Plan. Smith says many borrowers relied on those plans to keep monthly payments manageable.
"For some higher earners like that, the SAVE Plan, they had like really low payments, and now they're going to get pushed into a different plan where they might see their payments go up 50%, even more in certain situations," Smith said.
The bill also creates new federal borrowing caps for graduate and professional students — caps that may not fully cover the cost of degrees like medical or dental school.
"That's going to be capped at $50,000 a year and $200,000 for a lifetime. And if you know anyone who's gone to medical school or dental school, it's almost no one gets out unless they had financial help from family or friends or something with less than $200,000 in debt," Smith said.
Smith told me that because of those limits, more students may have to turn to private loans to finish their education. But unlike federal loans, private lenders may have higher criteria.
"When you go to private loans, they're going to be looking at your credit history. So if you have no credit history or you have poor credit, just from something in your past, then it's going to be much more difficult to qualify for certain loans," Smith said.
Smith also warns that borrowers currently on the SAVE Plan should pay close attention to upcoming deadlines as the changes begin rolling out.
"If you don't do anything, then they'll make that decision for you," Smith said.
This story was initially reported by a journalist and has been, in part, converted to this platform with the assistance of AI. Our editorial team verifies all reporting on all platforms for fairness and accuracy.
