Student loan borrowers face major changes under the Trump administration’s 2025 “big, beautiful bill.” Learn how the SAVE plan phaseout, new repayment options, and interest accrual will affect your financial future.
Trump’s Student Loan Repayment Changes: What Borrowers Need to Know in 2025
Student loan borrowers are navigating a dramatically shifting landscape as the Trump administration enacts sweeping changes to federal loan repayment policies. With the introduction of the administration’s 2025 “big, beautiful bill,” millions of borrowers are facing fewer repayment options, looming deadlines, and increasing financial uncertainty.
SAVE Plan Phaseout Accelerates Repayment Pressure
One of the most significant developments is the winding down of the SAVE plan (Saving on Valuable Education), a hallmark program of the Biden administration. Designed to help low-income borrowers with interest-free forbearance and payments as low as $0 per month, the plan was ruled illegal by the 8th U.S. Circuit Court of Appeals last year.
Now, interest accrual is set to restart next month for borrowers still on SAVE, with full phaseout expected by summer 2026. According to experts, borrowers must decide whether to switch to a new repayment option by August 1 or continue paying interest without credit toward forgiveness.
Borrower Options Narrow to Two Paths
By 2028, all existing repayment plans will be eliminated, leaving just two federal loan repayment options:
- Standard Repayment Plan—Requires borrowers to repay loans over 10 to 25 years, depending on loan amount.
- Repayment Assistance Plan (RAP) – A new income-based repayment option where payments could be as low as $10 per month, but repayment extends up to 30 years.
Angela Morabito of the Defense of Freedom Institute says RAP is designed to simplify repayment and reduce excessive debt burdens. However, critics argue the extended repayment period increases long-term costs.
Interest Charges Create Financial Strain
A recent analysis by the Student Borrower Protection Center found that under the new policies, the typical borrower will pay over $3,500 per year in interest charges. For many, this change could push them closer to default—a concern echoed by student loan advocates across the country.
Aissa Canchola Bañez, policy director for the Student Borrower Protection Center, advises borrowers who can afford it to leave SAVE and switch repayment plans before August 1 to begin earning credit toward Public Service Loan Forgiveness (PSLF). For others, staying on SAVE temporarily may still be the least financially burdensome path.
Backlog and Confusion Compound Borrower Anxiety
Borrowers must also contend with a backlog of nearly 2 million income-driven repayment applications, which began under the Biden administration. Federal loan servicers only resumed processing these applications in April 2025, leaving many borrowers in limbo.
Natalia Abrams of the Student Debt Crisis Center (SDCC) said the situation feels like “a flood-the-zone type scenario,” where confusion may be a feature, not a bug. She describes the new rollout as “reckless,” raising anxiety levels for many Americans.
Scam Risks on the Rise
As uncertainty spreads, scams targeting student loan borrowers are on the rise. Advocates urge individuals to contact nonprofit organizations and the Department of Education for legitimate guidance. Given the complexity and speed of changes, misinformation has become a critical threat.
Trump Administration Defends “Compassionate” Reforms
Despite the criticism, the Trump administration defends its policy changes as a “strategic and compassionate” solution to a system made worse by prior mismanagement. Ellen Keast, deputy press secretary for the Department of Education, emphasized that the administration is actively working with federal loan servicers to clear the application backlog and stabilize repayment systems.
Future of Student Loan Forgiveness Still Unclear
While hopes for broad student loan forgiveness appear dim under the current administration, advocates noted that the final version of the GOP-backed legislation did not remove the education secretary’s ability to cancel loans in the future. This leaves a potential path for future relief under a different administration.
What Borrowers Should Do Now
Borrowers are encouraged to:
- Review their financial situation carefully.
- Reach out to certified counselors or federal resources.
- Decide whether to stay on SAVE or switch to a new plan before August 1.
- Stay informed to avoid scams and misinformation.
Final Thoughts
The student loan system in 2025 is undergoing one of the biggest shifts in U.S. history. With the SAVE plan ending, fewer repayment choices, and interest resuming, borrowers must make fast, informed decisions. While the Trump administration claims to offer a fairer system, the true impact will depend on how effectively borrowers can navigate the new repayment landscape.