Changes in US legislation have become a reality since Donald Trump returned to the White House. Students are one of the groups most closely monitoring the decisions made by the Trump administration. The changes to federal loan repayment plans will be implemented by 2026. All of this revolves around the One Big Beautiful Bill Act.
The new changes will be applied on July 2026
The changes will specifically apply to those who apply for new federal student loans starting July 1, 2026. It’s worth noting that, according to the Federal Reserve Bank of New York, approximately one in four people with federal student loans were more than 90 days behind on their payments at the end of March.
Some financial lending experts warn that these changes will particularly affect low- and middle-income students, who may have to resort to private loans. Starting next year, anyone applying for new loans will default to one of the new plans available: either the Redesigned Standard Plan or the Repayment Assistance Program.
The standard plan will involve fixed payments over a period of 10 to 25 years
The RAP is designed as an alternative to income-driven repayment (IDR) plans, but with more rigid features. The monthly payment will be calculated as a percentage of adjusted gross income (AGI), rather than discretionary income as was the case with IDRs. The standard plan will involve fixed payments over a period of 10 to 25 years, while the income-driven plan will allow payments between 1% and 10% of monthly income, extending for up to 30 years.
Unlike other changes we’ve seen during the Trump Administration regarding financial aid, the RAP is not linked to inflation or the cost of living, which could affect many users’ actual ability to pay over time.
The Trump administration resumed the collection process on outstanding student loans
Recall that the Department of Education ordered the suspension of federal student loan payments in March 2020, providing borrowers with relief during the economic chaos wrought by the COVID-19 pandemic. Although payments were initially scheduled to resume in 2023, the Biden administration granted a one-year grace period that ended in October 2024. This year, the Trump administration resumed the collection process on outstanding student loans, with plans to garnish wages and tax refunds if the loans remain unpaid.
New Conditions for Pell Grants, Grad PLUS y Parent PLUS
As part of the One Big Beautiful Act, the Grad PLUS loan, a crucial financial tool that previously covered the full cost of vocational programs, will be eliminated. Parent PLUS loans will be limited to $20,000.
The conditions for Pell Grants are also changing. Students who receive a full-ride Pell Grant will no longer be eligible for additional funding. However, eligibility will be expanded to include students in job-training programs. Additionally, scrutiny of the Student Aid Index will be increased, which could make it more difficult for some families to obtain these grants.
It’s advisable for students or anyone thinking about applying for this type of loan to do so early. That is, the sooner the process is initiated, the clearer and faster the process will be.
