About 700,000 Wisconsinites have federal student loans. Starting July 1, they’ll face changes affecting repayment plans and borrowing capacities, among other rules.
Signed in 2025, President Donald Trump’s “One Big Beautiful Bill” requires nearly all federal student loan borrowers to adapt to capped loan amounts, eliminated the Biden-era payment plans, like Saving on a Valuable Education (SAVE), and has made changes to loan-forgiveness programs.
Here’s what borrowers, new and old, should know with the changes coming up:
90 days to choose new repayment plan
On July 1, loan servicers will contact borrowers enrolled in SAVE and require them to move to a new payment plan within 90 days.
About 135,000 people in Wisconsin are enrolled in SAVE, Carole Trone, executive director of the Wisconsin Coalition on Student Debt, told the Journal Sentinel. Those enrolled should keep an eye out for notices.
Anyone borrowing or consolidating after July 1 has to enroll in either the standard repayment plan or the Repayment Assistance Plan (RAP), an income-dependent plan. The RAP ties a higher percentage of income to monthly payment requirements than SAVE, and the standard repayment plan’s length depends on a borrower’s total outstanding balance.
If borrowers don’t select a new plan within the allotted window, they’ll automatically be put on the standard repayment plan, which raises monthly payments. Payment periods depend on borrowed amounts.
Borrowers can understand which plan requires the lowest payments each month by using a loan calculator tool on the federal student aid website.
New borrowing limits imposed
Direct federal student loans will be capped at $50,000 annually and $200,000 over a lifetime for some professional degree programs.
The Graduate PLUS loan program, which graduate students commonly use to cover living expenses during school, is being eliminated.
These changes will offset rising tuition costs for professional and graduate degree programs, Republicans say.
Some financial aid experts, however, think caps will make students financially less able to pursue degrees like law, medicine and veterinary medicine, or push them toward private loans. Private loans have fewer protections, higher interest rates, unfavorable repayment terms and sometimes require a co-signer.
The Wisconsin Coalition on Student Debt, a nonprofit group, has an anonymous, confidential hotline, 833-589-0750, for borrowers to directly consult student loan experts. The coalition has helped about 900 borrowers, Trone said.
SAVE and loan forgiveness borrowers in limbo
Borrowers working in public service, including teachers, nurses and police, can have debt erased after 10 years of working through the Public Service Loan Forgiveness program.
But the federal education department said, starting July 1, workers whose government or nonprofit employer engages in activities with a “substantial illegal purpose” would be denied. This includes organizations that work with undocumented immigrants or provided children with gender-affirming care.
Borrowers enrolled in SAVE who also seek public service loan forgiveness had payments frozen because of court cases following Democratic cities suing, pausing progress toward loan forgiveness.
New student loan oversight by federal agency
The oversight of federal loans is moving from the office of Federal Student Aid to the Treasury Department, the U.S. Education Department announced.
The change is happening in phases, and no borrower terms, interest rates or late payment consequences will be affected during the transition. The government can, however, garnish wages and withhold Social Security payments and federal tax funds.
This article originally appeared on Milwaukee Journal Sentinel: July 1 student loan changes may affect Wisconsin borrowers
Reporting by Elena Metinidis, Milwaukee Journal Sentinel / Milwaukee Journal Sentinel
USA TODAY Network via Reuters Connect
By Elena Metinidis, Milwaukee Journal Sentinel | USA TODAY Network
