The student loan landscape will look a lot different starting in July when new regulations as part of the Trump Administration’s 2025 One Big Beautiful Bill Act take effect.
There will be changes to how federal student loans are paid back and limits on how much can be borrowed by students and their parents.
Beginning July 1, any borrowers still on the Saving on a Valuable Education (SAVE) Plan have 90 days to choose a new repayment plan.
One new option will be the Repayment Assistance Plan (RAP). A borrower’s monthly payment will be based on their adjusted gross income plus a $50 credit for each dependent.
Connecticut Student Loan Ombudsman Michelle Jarvis-Lettman says it's still not clear if the RAP program will benefit all student loan borrowers because the federal government has not yet provided the state with enough information.
"Some borrowers who have a lower income threshold, it might benefit them better, because their payments are going to be lower," Jarvis-Lettman said. “But those people who are in higher income brackets, I'm not sure they're going to see a big enough difference on this repayment plan.”
RAP will forgive any remaining loan and interest after 30 years of payments.
Borrowers who don’t choose a new repayment plan within 90 days will automatically be enrolled in the Standard Repayment Plan or new Tiered Standard Plan.
Parent PLUS Loans
Any Parent PLUS Loans taken on or after July 1 will no longer be eligible for income-based repayment plans or Public Service Loan Forgiveness (PSLF).
PSLF forgives federal student loans after 10 years if a person works for a non-profit or the government and consistently makes monthly loan payments.
There will also be maximum limits on how much money Parent PLUS borrowers can receive.
- No more than $20,000 annually per child
- No more than $65,000 total for each child in undergraduate school
- There are exceptions for parents whose children were enrolled in undergraduate school before July 1, 2026
“They [parents] are getting the short end of the stick, essentially,” Jarvis-Lettman said.
The student loan repayment process can be confusing and overwhelming, but Jarvis-Lettman said her office is available for one-on-one appointments to help Connecticut residents calculate which program best meets their needs.
