Cassandra Kormendy's monthly student-loan payment is set to more than double. The 39-year-old borrower currently pays $530, but that figure is projected to climb to $1,200. She is one of roughly seven million borrowers still enrolled in the now-eliminated SAVE repayment plan. The new rules from the Trump administration took effect July 1, 2026, and they are upending repayment for millions.
The new rules stem from a spending law signed by President Trump that the administration has called "big beautiful." Education Undersecretary Nicholas Kent explained in a statement that the new rules aim to remedy "longstanding challenges in higher education and federal student lending, including exorbitant tuition costs, unchecked borrowing, and a confusing maze of repayment options that too often leave borrowers with higher balances despite making payments." Critics warn that these changes could push borrowers into higher-cost private loans or default.
Under rules that took effect July 1, 2026, the Trump administration terminated the SAVE plan, which had offered income-driven repayment options. Borrowers in that plan have 90 days starting July 1 to pick a new plan. If they fail to choose, they will be placed automatically into a standard or tiered plan. The tiered plans have repayment terms of 10, 15, 20, or 25 years, depending on the amount borrowed.
Those options are likely more expensive. A warning came from Sara Partridge, an associate director at the Center for American Progress focusing on higher education: "Borrowers "will face massive sticker shock this summer and autumn as they are pushed to transition into other repayment plans"." Kormendy echoed that worry: "I'm scared to not pay them and what will happen."
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The new rules also give a small break to those who enroll in automatic monthly payments. From July 1, 2026, through June 30, 2028, autopay borrowers get a 1 percentage point reduction on their interest rate.
The overhaul also set strict limits. Graduate students now face a $100,000 lifetime cap, while professional students are capped at $200,000. For Parent PLUS loans, the maximum is $20,000 per child per academic year, with a total cap of $65,000 over a program. These caps are meant to curb what the administration described as unchecked borrowing and high tuition costs.
Borrowers who hit the caps may need to turn to private loans. Washington University School of Law announced a private loan program for incoming law students who have maxed out federal options. Yale's public health school introduced a loan program with terms comparable to federal ones, signaling that schools expect more students to hit the caps.
The administration had proposed classifying 11 graduate programs as "professional" to enforce separate caps, but a federal judge vacated that rule. Litigation over the borrowing limits is ongoing.
The rules also tightened the path to default. Borrowers who miss payments for 270 days will enter default, which can damage credit and lead to wage garnishment. Meanwhile, the pause on collections for borrowers already in default remains in effect with no end date announced. Undersecretary of Education Nicholas Kent issued a statement about the changes, defending them as necessary to control borrowing and simplify repayment.
For borrowers like Kormendy, the payment hike feels like a financial cliff - a sudden drop from manageable payments to a much steeper monthly obligation. Private lenders are preparing for an increase in demand as federal borrowers face these new limits.
A federal court has also blocked the administration's attempt to narrow eligibility for Public Service Loan Forgiveness, or PSLF. That means borrowers working in government or nonprofits can still get forgiveness after 10 years of qualifying payments, at least for now. The student-loan landscape is shifting fast, and borrowers must act soon or pay the price.
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