The Impact of the Big, Beautiful Bill on Student Loan Borrowers
Anastasia Harisis works as a barista at Cafe Sasso in Rochester, New York. This job is not what she envisioned after graduating from college, but it has become necessary due to the challenges she has faced in finding employment in her field. “I’ve been doing food service since then to be able to afford things like student loans,” she said. For many individuals like Harisis, the burden of student debt is becoming even more difficult to manage.
The recent passage of the so-called Big, Beautiful Bill has introduced significant changes to federal student loan programs. One of the most notable impacts is the elimination of income-driven repayment plans such as the Saving on a Valuable Education (SAVE) and the Pay As You Earn (PAYE) plans. These programs allowed borrowers to make payments based on their income, making them more affordable for those with lower earnings.
Adam Minsky, an attorney and Forbes contributor who frequently writes about student loans, explains that while these plans will not disappear immediately, they are set to end by July 1, 2028. “There will be income-driven options, but they’re just not going to be as affordable or as favorable as some of the plans that people have been enrolled in,” Minsky said. He warns that the changes could lead to significant increases in monthly payments, with some borrowers seeing their payments double.
This increase in payments could result in a surge of defaults, according to Minsky. “It’s going to wreck people’s credit,” he said. “The government has very powerful tools to pursue people in default, and it’s going to get really nasty.” The Department of Education has already acknowledged the potential impact of these changes.
For those currently enrolled in the SAVE plan, there may still be options available. They might be able to remain in the plan and take advantage of forbearance, but the Trump Administration has sent letters to borrowers in the plan stating that interest will start accruing in August. Minsky suggests that those in this position must carefully consider whether it is better to stay in the SAVE plan or transition to another plan, even if it means paying more each month.
However, figuring out the best course of action can be challenging, as the government’s loan simulator has not been updated to reflect the changes. This lack of clarity makes it difficult for borrowers to understand how the new rules will affect their specific situations.
In addition to impacting existing borrowers, the bill will also affect future federal student loan recipients. “Future federal student loan borrowers will have fewer options,” Minsky said. “There are new caps and limits on federal student loan borrowing, so you might not even be able to cover the total cost of your education through federal student loans anymore.”
For Harisis, the uncertainty surrounding student loan payments has made her educational goals more difficult to achieve. She plans to return to school to become a nurse, but any increase in her monthly payment would make this goal nearly impossible. “You can’t draw blood from a stone, as they say,” she said. “I won’t have it, and that’s just the reality.”
As the changes to student loan policies continue to unfold, borrowers across the country are left navigating a complex and uncertain landscape. With limited options and increasing financial pressure, many are questioning whether they can afford to pursue higher education at all.
