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Student loan changes: Fewer options, higher payments
The federal government introduced sweeping reforms to student loan policies that took effect on July 1. FOX 9's Mike Manzoni has the latest details.
EDEN PRAIRIE, Minn. (FOX 9) - Sweeping changes to federal student loans are now in effect, bringing new borrowing caps and fewer repayment choices for students and families.
Student loan caps and fewer repayment options now in place
What we know:
Borrowers in graduate school now face new borrowing limits – either $200,000 or $100,000, depending on the program. Before this, students could borrow up to the full cost of their degree.
Parent PLUS loans are also capped at $20,000 per student or $65,000 per family. In addition, Parent PLUS borrowers no longer qualify for income-driven repayment plans.
The SAVE plan, another income-driven repayment option, has been eliminated. That leaves just three income-driven plans available for federal student loans: the Income-Based Repayment plan, the Income-Contingent Repayment plan and the Pay As You Earn plan
The backstory:
The changes were part of the "Big Beautiful Bill," a tax and spending cut measure that President Trump signed into law in July 2025.
What they're saying:
"I think there are going to be situations where people’s payments go up...." said student loan expert Brian Walsh. "As payments go up, and people are already stressed and finding room in their budget, then that could be a challenging situation."
By the numbers:
About 9 million federal student loan borrowers are already in default, and hundreds of thousands more are struggling to make payments, according to the Education Department. Minnesota ranks No. 5 in the nation for student loan debt, according to Education Minnesota, an advocacy group.
Why you should care:
These new rules are expected to raise monthly payments for some. With fewer repayment options, some families may find it harder to stay current on their loans, leaving them to turn to private loans to fill the gap.
"I cannot encourage people to shop around enough," said Walsh. "I think people shop around for lots of different things, but even tiny differences in interest rates when you’re talking about balances this big can really, really add up."
The Source: This story uses information gathered by FOX 9 reporter Mike Manzoni.