Trump-era loan reforms could raise monthly payments for many borrowers

A report released by the Center for American Progress examined how the student-loan repayment overhaul enacted under President Donald Trump will affect borrowers. The law, effective July 1, replaces the Biden-era SAVE plan with a Repayment Assistance Plan that, for a typical graduate earning about $68,600 a year, could raise monthly payments from roughly $136 to $343. The analysis, based on Census and income surveys, also notes that new parent PLUS loans after July 1, 2026 will be capped at $65,000 and limited to a standard repayment schedule, eliminating income-contingent options.

Additionally, the changes end the ability to defer payments during unemployment or hardship, a tool previously used to avoid delinquency. The report warns that higher bills and reduced flexibility may increase default risk, which already affects millions of federal loan borrowers.