Federal student loans are changing. Here's what to expect in 2026

Federal student loans are changing. Here's what to expect in 2026 Borrowers have spent much of 2025 trying to keep up with dizzying changes to the federal student loan system. The Trump administration and Congress are in the process of overhauling everything from how much Americans can borrow to how quickly they have to pay it back. Here's what to know as we head into a new year: President Biden's SAVE Plan is ending The U.S. Department of Education announced in early December that it had reached a proposed settlement agreement to end the popular, yet controversial Biden-era student loan repayment plan known as SAVE. The Saving on a Valuable Education Plan "was the most affordable, generous and flexible plan for millions of student loan borrowers," says Persis Yu of the liberal advocacy group Protect Borrowers. But it was so affordable, generous and flexible - with its fast-tracked loan forgiveness and monthly payments as low as $0 for low-income borrowers - that Republican state attorneys general sued the Biden administration for exceeding its authority. Legal challenges put SAVE borrowers in limbo for months, during which they were not required to make payments on their loans. Interest began accruing in August. This new agreement, pending court approval, would end the long legal battle by ending SAVE itself. "The law is clear: if you take out a loan, you must pay it back," Under Secretary of Education Nicholas Kent said in a statement announcing the proposed agreement. "American taxpayers can now rest assured they will no longer be forced to serve as collateral for illegal and irresponsible student loan policies." Under the agreement, the Education Department would commit to moving the roughly 7 million borrowers still enrolled in SAVE into other repayment plans - though some of those plans are also in flux . Whether you blame Biden or Republicans for SAVE's downfall, Betsy Mayotte, founder of the Institute of Student Loan Advisors (TISLA), says it puts borrowers in a real bind. "People that made other financial decisions based on what they thought their payment was gonna be on the SAVE plan - they're in trouble," Mayotte says. "A payment plan has never been challenged in court and has never been pulled out from existing borrowers." Now, Mayotte says, those roughly 7 million SAVE borrowers will have to change plans and find a way to afford what will likely be higher monthly payments. Complications for borrowers working toward Public Service Loan Forgiveness Liz Kilty, an oncology nurse in Portland, Ore., has been on the SAVE plan from the start. "As soon as SAVE was an option, I signed up for it," says Kilty, who works in a public hospital and wanted to keep her monthly payments reasonably low on her way toward Public Service Loan Forgiveness (PSLF). Since 2007, PSLF has offered a path for borrowers who work in public service - including teaching, nursing and policing - to have their loan balances erased after 10 years on the job. Kilty has...

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