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Trump’s student-loan changes are coming — but there’s an exception to the new borrowing limits

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Major student-loan changes are coming, including new caps on borrowing. Some people might not face them right away.

On July 1, the repayment changes in President Donald Trump’s “big beautiful” spending legislation will take effect. The changes include a new income-driven repayment plan, ending a program that allows graduate students to borrow the full cost of attendance, and introducing new borrowing caps for advanced degrees.

While some provisions will be phased in by 2028, others, like the new borrowing caps, will be implemented this summer. However, some borrowers may qualify for an exception.

According to Federal Student Aid, borrowers who meet the following requirements will be able to retain the loan limits that existed prior to July 1:

  • You were enrolled in a program of study as of June 30, 2026
  • You received at least one direct federal loan, or your parent received a parent PLUS loan, for that program of study prior to July 1, 2026
  • And you are enrolled at the same institution and pursuing the same credential after July 1, 2026, meaning that if you are in a bachelor’s degree program, you cannot switch to an associate degree program to maintain the loan limit exception.

Borrowers who qualify for the exception will retain it for either three academic years or the difference between the expected length of the program and the amount the borrower has already completed, whichever is shorter.

The Trump administration has said the repayment overhaul is intended to simplify a complicated repayment system and curb excessive borrowing, for example with the new caps.

Advocates and Democratic lawmakers have warned that the looming repayment changes could financially strain borrowers. In addition to the new loan limits, the Trump administration also eliminated the SAVE repayment plan, created by former President Joe Biden to give borrowers cheaper monthly payments and a shorter timeline to loan forgiveness.

In July, the 7 million borrowers enrolled in SAVE will begin learning details of their 90-day timeframe to switch to a new repayment plan and face higher monthly payments, some to the tune of hundreds of dollars more.

Have a story to share about student loans? Reach out to this reporter at asheffey@businessinsider.com.




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Millions of student-loan borrowers are kicked off of Biden’s key affordable repayment plan in a surprise court reversal

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The roller coaster ride for borrowers enrolled in a key affordable repayment plan continues.

On Monday, the 8th Circuit directed a district court to approve President Donald Trump’s proposed settlement with the state of Missouri to eliminate the SAVE student-loan repayment plan.

The plan has been embroiled in a legal back-and-forth for years. Most recently, a district court declined to rule on the proposed settlement, which some advocates and lawmakers saw as a win for borrowers and urged the Department of Education to carry out relief under SAVE.

However, the 8th Circuit’s ruling means that, once approved, the department will move forward with the settlement and require enrolled borrowers to transition to a new plan.

“In the coming weeks, the Department will issue clear guidance on next steps for borrowers enrolled in the illegal SAVE Plan, including details regarding how borrowers can move into a legal repayment plan,” Nicholas Kent, the undersecretary of education, told Business Insider in a statement. “The Trump Administration will continue to realign the federal student loan portfolio to better serve students and taxpayers.”

The settlement would give borrowers “a limited time” to select a new repayment plan and begin repaying the loans. Once the settlement is approved, the department will not enroll any new borrowers in SAVE, it will deny pending applications, and move all enrolled borrowers to existing plans.

Advocates criticized the 8th Circuit’s ruling, saying it will push borrowers into unaffordable monthly payments.

“The millions of borrowers who had a right to lower monthly student loan payments and relief through SAVE will now face thousands of dollars in higher bills every year thanks to the right-wing campaign against borrowers,” Winston Berkman-Breen, legal director at advocacy group Protect Borrowers, said in a statement.

SAVE was created by former President Joe Biden in 2023 and intended to give borrowers cheaper monthly payments and a shorter timeline to debt relief. The plan has been blocked since the summer of 2024 due to litigation from GOP-led states, including Missouri, which said that the relief through SAVE was unconstitutional.

This ruling pushes SAVE borrowers off the plan earlier than scheduled. Trump’s “big beautiful” spending legislation called for the plan to be phased out by 2028, giving enrolled borrowers more time to prepare for higher payments on a new plan.

Have a story to share? Contact this reporter at asheffey@businessinsider.com.




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