If you have student loan debt or are planning to take out loans to pay for college, you’ve probably been getting flooded with headlines about financial aid.
President Donald Trump’s administration has made a handful of changes that will affect current student loan borrowers and future students.
Starting this summer, graduate students will no longer be eligible for extra loans to help cover the costs of attendance. Parents now have a limit on how much they can borrow to help their kids pay for college. And, on top of all that, some loans will now be managed by the Treasury Department.
“The last few years have been the most chaotic time in the student loan industry, which has made things more difficult for borrowers,” said Betsy Mayotte, president and founder of nonprofit The Institute of Student Loan Advisors.
Mirror Indy spoke to experts to find out what borrowers actually need to know right now.
What does this mean for you?
Major changes coming to federal student loans
Do you need to change repayment plans? This quiz can help you find out.
What does the move to the Department of Treasury mean for my loans?
Earlier this month, the Trump administration announced that it will transfer management on student loans that are in default from the federal Education department to the Treasury department.
It’s part of the administration’s plans to dismantle the Department of Education.
Being in default on student loans means the borrower hasn’t made their required payments in at least 270 days, which is nearly nine months.
If you’ve been making payments and are not in default, this move doesn’t affect you. Though the Trump administration has said it eventually plans to transfer management of all loans to the Treasury department, that’s not happening yet.
What if I’m in default?
If you are in default, you should work with your loan servicer (the company you make loan payments to) to start paying your loan again. Options include rehabilitation, which is making a series of on-time payments; or consolidation, meaning combining your loans into one loan with a new monthly payment and interest rate.
“The practical item here has not changed from before,” said Bill Wozniak, vice president and chief marketing officer for INvestEd, a Carmel-based financial aid nonprofit. Your loan servicer will have all the information about your loans, “no matter what the status is, until you hear otherwise,” he said.
The federal government has paused wage garnishment, meaning it won’t take a portion of someone’s paycheck to cover loan payments for borrowers who are in default. But the government may resume garnishing wages, so experts advise making efforts to get out of default as soon as possible.
What’s going on with the SAVE plan?
If you are enrolled in the Saving on a Valuable Education plan, you’ve technically been in forbearance for almost two years. While in forbearance, you don’t have to make monthly payments.
But that’s changing soon. While it’s true that SAVE borrowers haven’t been required to make payments, loans started accruing interest in August. And, after a lengthy court battle, the Department of Education said March 27 that borrowers still enrolled in the SAVE plan will be officially alerted July 1 that they need to switch to a different repayment plan.
If borrowers haven’t switched 90 days after the July deadline, the department will put them on the standard plan, which often comes with the highest monthly payments, sometimes running up to hundreds of dollars a month.
There are other income-driven repayment plans available. To enroll in another plan, go to the Federal Student Aid website and log in to see your options.
Can I still get public service loan forgiveness?
Yes. But if you’re enrolled in the SAVE plan, you may not be getting the best bang for your buck.
To qualify for public service loan forgiveness, you need to make 10 years of payments while working at an eligible agency or organization and while enrolled in an eligible plan.
Meanwhile, the Trump administration is pushing to change which employers are eligible for PSLF, though these changes are tied up in court.
Because the SAVE plan has been tied up in the courts, borrowers haven’t been required to make payments since July 2024. But that also means that those borrowers haven’t been able to get credit for payments and put that towards their PSLF plans.
To get credit for the payments you’re making, make sure to switch to an eligible repayment plan as soon as possible.
You can also make payments retroactively as part of a process called PSLF buyback.
To be eligible, you must have been employed with an eligible company during the SAVE plan pause and be close enough to forgiveness that making those payments would get you to 10 years, which is 120 months. You can learn more about that process using this guide from the National Association of Federal Student Aid Administrators.
I have a Parent PLUS loan. What should I do?
There are significant changes coming for parents who have taken out student loans to help pay for their kids’ education.
Starting July 1, the Trump administration is capping the amount parents can borrow as part of the Parent PLUS program at $20,000 per year and $65,000 per student over their college career.
These changes will only affect incoming first-year college students and their families.
But there’s another wrinkle coming into play this summer. As of July 1, parents who take out a Parent Plus loan will no longer have the option to pay off loans using an income-driven repayment plan, which can lower monthly payments by hundreds of dollars in some cases.
If you currently have a parent loan, you can still apply to consolidate and get on an income-driven plan. But you’ll need to act fast: The deadline to have your loans consolidated is July 1.
It can take weeks or even months for a loan consolidation to be approved, so Mayotte recommends applying as soon as you can — ideally by April 1 — if you’re interested in getting on an income-driven repayment plan.
I have a Grad Plus loan. What are my options?
Major changes are also coming for graduate student loans. The Trump administration is discontinuing the Grad PLUS loan program, which is an extra loan for graduate students to cover expenses not paid for by federal or school aid.
Good news for current graduate students: You’re still eligible to take out Grad PLUS loans for the next three years or until you graduate, whichever comes first.
But if you’re starting graduate school after July 1, you won’t be able to take out additional loans. Most graduate students are limited to $20,500 in federal loans a year or $100,000 for the entire time they’re in grad school.
The federal government has proposed designating some graduate programs as “professional,” including law school and medical school. Those professional students would be able to take out up to $50,000 annually or $200,000 total.
But that still may not be enough to cover the total cost of attendance. According to the American Association of Medical Colleges, the median cost of medical school for the class of 2026 at a public university was $297,745.
That means that many graduate students could turn to private student loans to help finance their education.
I have more questions. Where can I get help?
Mayotte’s nonprofit, The Institute of Student Loan Advisors, offers free student loan advice to borrowers. Email tisla@freestudentloanadvice.org with your questions. You can also find free information and resources about forgiveness plans, interest rates and defaulted loans.
INvestEd also offers free advice on student loans and financial aid to Hoosier students and families. Get in touch by calling 317-715-9007 or emailing outreach@investedindiana.org.
Mirror Indy, a nonprofit newsroom, is funded through grants and donations from individuals, foundations and organizations.
Claire Rafford covers higher education for Mirror Indy in partnership with Open Campus. Contact Claire by email claire.rafford@mirrorindy.org, on most social media @clairerafford or on Signal 317-759-0429.
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