President Donald Trump's tax and spending bill has triggered sweeping changes to federal student loans, affecting both current borrowers and future students.
The United States has nearly 43 million people who owe a combined $1.7 trillion in student loan debt. New rules now in effect could change how much borrowers pay each month and how much future students can borrow.
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"There's really two buckets of changes," Betsy Mayotte with the Institute of Student Loan Advisors said. "There's the changes that effect students that are in school now or will be attending school in the future. And then there's a bucket of changes that are related to the plans that people use to pay off their student loans."
One of the most immediate changes is the elimination of the Biden-era SAVE payment plan. About 7 million borrowers who were enrolled in the plan now have 90 days to switch to a new payment plan. They can choose between two federal options: the Repayment Assistance Plan (RAP), where borrowers pay based on their income, or the Tiered Standard Repayment Plan.
"If you are one of the SAVE borrowers, don't panic. But educate yourself," Mayotte said. "Take the time to educate yourself about the different payment plans and see which one will best fit short-term budget, long-term goals."
New borrowing caps are also going into effect for future students. Those pursuing a master's degree can borrow up to $20,500 per year and $100,000 in total. Professional students, such as those in law school or medical school, are capped at $50,000 per year and $200,000 in total. Parent Plus loans now carry a $65,000 lifetime borrowing limit.
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The Department of Education said the new loan limits "will curb excessive borrowing and force institutions to evaluate their costs."
Borrowers can compare repayment options and estimate their new monthly payment using a calculator tool at studentaid.gov.
