Trump's Student Loan Overhaul: What's Actually Changing?

The Republican budget proposal—Trump’s “big, beautiful bill”—is quietly reshaping federal student loans in ways that could hit millions of borrowers hard. While headlines focus on taxes and immigration, education experts are flagging major changes in loan repayment rules.

The Big Picture: From 8 Plans to 2

Currently, borrowers juggle 8 different repayment plans. The new plan cuts it down to two:

1. Standard Repayment Plan (tiered by loan size)

   • Under $25K: 10 years, fixed payment
   • $25K-$50K: 15 years
   • $50K-$100K: 20 years
   • $100K+: 25 years

2. Repayment Assistance Plan (RAP) (for struggling borrowers)

   • Payments: 1-10% of adjusted gross income (minimum $10/month)
   • 30-year forgiveness timeline
   • Interest waived if payment doesn’t cover accrual

The catch? Borrowers currently on Biden’s SAVE plan—where half had $0 monthly payments—would see payments jump significantly. No wonder education policy experts are calling this a game-changer.

3 More Changes to Know

Borrowing Limits Tighten

• Lifetime cap: $257K (Senate) or $200K (House)
• Parent PLUS: $20K/year, $65K lifetime (Senate)
• Grad/professional students: Annual and lifetime caps introduced
• Grad PLUS program: Phased out entirely

Deferment Options Shrink

• Economic hardship deferment: Eliminated
• Unemployment deferment: Eliminated
• Impact: Low-income borrowers lose key safety nets

Pell Grants Get Restructured

• Part-time students may lose eligibility (House proposal)
• New “Workforce Pell” for trades, cosmetology, healthcare training (150-599 hours)
• Stricter need-based requirements coming

Will This Actually Happen?

The bill passed the House narrowly and cleared a Senate subcommittee, but final text is still in flux. Key battlegrounds: Pell Grant definitions and loan caps differ between chambers.

One wrinkle: Senate may use “budget reconciliation” to pass it with 51 votes instead of 60. But this triggers the “Byrd Rule,” which lets senators challenge provisions as policy, not budget items. Senate parliamentarian Elizabeth MacDonough gets the final say on what sticks.

Bottom line: Student loan borrowers should pay attention. Some proposals—especially those affecting low-income repayment—are almost certain to survive negotiation. Self-imposed deadline: July 4.