A number of new changes related to student loan repayment will kick in on July 1 because of the “Big Beautiful Bill” from last year. This includes the end of a short-lived Biden-era repayment plan, the start of two Republican-designed repayment plans and strict new borrowing limits for some students.
“Thanks to Trump and his ‘Big Beautiful Bill,’ student loan payments will go up as much as $4,000 a year starting July 1st. While billionaires get massive tax breaks, working people will be defaulting on their debts,” Senator Bernie Sanders said on X.
“Unacceptable,” added Sanders, who previously advocated for cancelling student loan debt.
Read: Millions of student loan borrowers could see paychecks cut in January (December 24, 2025)
A report by the NPR elaborated on the end of the Biden-era Saving on a Valuable Education (SAVE) plan, which has around seven million people enrolled in it. Borrowers enrolled in SAVE would have already gotten a notice from the U.S. Department of Education, warning them to switch plans soon. They are also likely to be getting another note from their loan servicer, starting a roughly 90-day clock. If borrowers don’t act, the department says it will enroll them in one of the least flexible repayment plans.
Financial aid experts have told NPR that this effort, beginning July 1, to push millions of borrowers into repayment and into new plans that will cost more than SAVE, could exacerbate an alarming rise in student loan defaults – especially considering that many borrowers enrolled in SAVE precisely because their low incomes qualified them for a $0 monthly payment.
Read: Big Beautiful Bill: $1 billion set aside for ‘offensive cyber operations’ instead of defense (July 15, 2025)
“Be very careful when it comes to taking out new student loans,” said Landon Warmund, a certified financial planner and certified student loan professional at Reliant Financial Services in Kansas City, Missouri.
That’s because those who borrow federal student loans after July 1 will go from a “legacy borrower” to a “new borrower,” subject to a heap of different rules included in the legislation passed last year, said Kathleen Boyd, a CFP and founder of Student Loan Savvy in San Diego. Boyd called this “really high stakes stuff.”
The “One Big, Beautiful Bill” is a sweeping Republican-led legislative package aimed at permanently extending the 2017 Trump tax cuts while introducing new tax breaks and substantial budgetary shifts. Supporters claim the bill will spur economic growth, increase take-home pay, and improve national security. Critics warn it disproportionately benefits wealthier households, undermines healthcare and food assistance for vulnerable populations, and adds an estimated $2.5 trillion to the national debt over ten years.