If you have a federal student loan — or are about to take one out — the rules are changing this week. Here is what to know.
New borrowers get just two repayment plans
For loans taken out on or after July 1, borrowers will choose between two repayment options — a standard plan and a new income-based "Repayment Assistance Plan" — down from the larger menu that existed before, ABC7 reported, citing changes from the 2025 budget-reconciliation law. The new income-based plan ties payments to earnings, but advocates have cautioned it could mean higher monthly bills for some borrowers than the plans it replaces. Existing borrowers can generally stay on most current plans, though two older income-driven options are set to be phased out by 2028.
The SAVE deadline
The biggest near-term issue is the end of the SAVE plan, the income-driven program that enrolled about seven million people. Borrowers on SAVE will have a window — reported at 90 days from their official notice — to choose a new plan, CBS News reported; those who don't act risk being moved automatically into a standard plan, which usually carries higher payments. Anyone on SAVE should log in to the federal aid site and compare options now rather than wait.
First-ever borrowing caps
The law also sets lifetime limits on federal borrowing for new loans — reported caps of roughly $100,000 for master's students and $200,000 for professional-degree students such as those in law or medicine, with an overall ceiling around $257,500. Parent PLUS borrowing is newly capped (about $20,000 a year and $65,000 per student), where it was previously limited only by the cost of attendance, and new borrowers will no longer have access to Grad PLUS loans, while existing borrowers are grandfathered in. The figures are attributed to the reporting above and the Education Department; families at expensive programs should check them against official sources, because the caps could leave a gap between federal loans and a program's full cost.
What to do now
Borrowers should confirm which plan they're on through their loan servicer; SAVE enrollees should pick a new plan before their deadline; those on the two expiring plans should research alternatives ahead of the 2028 phase-out; and anyone planning graduate school or parent loans should model their borrowing against the new caps. Official information and a repayment calculator are at the U.S. Department of Education's site, studentaid.gov.
A California note
California has more federal student-loan borrowers than any other state — millions of residents — so the SAVE transition and the new caps will ripple widely here. Borrowers who run into problems with a servicer can also seek help through the state's student-loan ombudsman. The through-line for everyone: the changes are real, some carry deadlines, and the safest move is to check your account now rather than be reassigned to a plan you didn't choose.
