Trump's sweeping student-loan repayment overhaul goes into effect in the new year. Here's what's changing.

• A slew of student-loan repayment changes are coming this year.
• They include new repayment plans and borrowing caps for advanced degrees.
• The Education Department is also set to eliminate the SAVE plan for millions of borrowers.

The new year is bringing a host of new changes for millions of student-loan borrowers.

Beginning in July 2026, the student-loan provisions signed into law in President Donald Trump's "big beautiful" spending legislation are set to begin taking effect. Those provisions include rolling out new student-loan repayment plans, new borrowing caps, and eliminating existing income-driven repayment plans, which could result in higher monthly payments for borrowers.

Here's what the Trump administration has in store for student-loan repayment in 2026.

New student-loan repayment plans

Beginning in July, the Department of Education plans to begin its process of eliminating existing income-driven repayment plans and replacing them with two options: a standard repayment plan and a new Repayment Assistance Plan.

The standard repayment plan would set fixed payments for borrowers over a 10 to 25-year period based on the borrower's original balance. The Repayment Assistance Plan would serve as the income-based option for borrowers; it would set payments at 1% to 10% of the borrower's income, with a minimum monthly payment of $10 and forgiveness after 30 years.

It's less generous than the existing income-based repayment plan, which forgives balances after 20 or 25 years, and former President Joe Biden's SAVE plan, which would forgive balances after as few as 10 years of payments.

Borrowers who took out loans before July 1, 2026, will have until 2028 to enroll in RAP before the other plans phase out. Borrowers who take out loans after July 1, 2026, will only have RAP and the standard repayment plan as available repayment options.

Borrowing caps for advanced degrees

In addition to new repayment plans, Trump's spending legislation eliminated the Grad PLUS program, which allowed graduate and professional students to borrow up to the full cost of attendance for their programs.

It also implemented new borrowing caps for borrowers seeking advanced degrees. Graduate students would have a cap of $20,500 a year or $100,000 over a lifetime, and professional students would have a cap of $50,000 a year and $200,000 over a lifetime.

The Department of Education also proposed instituting a revised definition of a "professional" program, which included 10 programs that would qualify for the higher borrowing cap, including medicine, law, and dentistry. The new definition was a key point of contention with stakeholders who negotiated the terms with the department because the revised definition leaves out advanced programs like nursing, some of which have tuition that is above the proposed caps.

Eliminating the SAVE plan

Trump's spending legislation included eliminating the SAVE plan as part of its phase-out of existing income-driven repayment plans by 2028. However, his administration announced a proposed settlement with the state of Missouri in December that would end the SAVE plan as soon as the court approves the settlement.

It means that the 7 million borrowers enrolled in SAVE would have a limited period of time to find a new repayment plan and restart their monthly payments at a higher amount. Additionally, the department said that it would deny pending applications to SAVE, which would include 450,000 borrowers who have expressed interest in enrolling in the plan.

Expanding eligibility for income-based repayment

The Department of Education is expanding eligibility for income-based repayment plans by removing the requirement of partial financial hardship. Prior to Trump's spending legislation, borrowers seeking to enroll in an IBR plan were required to have a monthly payment based on their income that was less than the amount needed to pay off their full balance over 10 years.

Removing that requirement, which the department said would be completed in December 2025, means that borrowers with higher incomes would be eligible to enroll in IBR. Additionally, the department said that servicers would hold IBR applications that would otherwise be denied, and the applications would be processed once the updates to IBR were completed.