When we last talked about student loans a few months ago, here’s what I had to say:
Have you noticed all the attention on student loans lately?
To say there is some confusion and uncertainty would be an understatement.
I don’t have any better idea than you do about what may happen in the student loan landscape.
No matter what happens, the way I see it, you have two options,
The first option is to do nothing, get angry, and blame everyone else.
The second option is to take ownership, get prepared, and educate yourself about the student loan system so you’re ready for whatever comes next.
If you’ve chosen the second option, you’re in the right place. That means you’re determined to not let outside factors you can’t control hinder your progress towards financial freedom.
Well, we now know what comes next.
The One Big Beautiful Bill Act, signed into law July 4, 2025, included changes to the federal student loan system.
Since then, a number of readers have reached out for my thoughts.
Today, we’ll cover some of the biggest changes that will impact Think and Talk Money readers, like lawyers and professionals.
The bottom line is, regardless of how you feel about the changes, you still have two options.
You can either do nothing, get angry, and blame everyone else.
Or, you can take ownership, get prepared, and educate yourself.
If you’ve chosen the second option, let’s get started.
The basic concepts of paying off student loans has not changed.
The two biggest changes for student loans relate to the (1) repayment options and (2) the amount that can be borrowed.
Understanding the changes shouldn’t be too difficult:
You now have less repayment options and can borrow less money overall from the federal government.
We’ll talk about the specifics next.
Before we do, always remember that paying off student loan debt is really not that different from paying off any other form of debt.
As significant as the changes might seem, the basic concepts of paying off student loan debt remain the same.
If you’d like to review the basic concepts of paying off student loan debt, check out this post:
Also, keep in mind that the recent changes apply only to the federal loan system. There will be side effects for the private loan system, but the federal system is getting all the attention right now.
For example, even before the new law, people commonly needed both federal and private loans because federal loan amounts were capped and college and grad school are expensive.
Once you took out all the federal loans you were eligible for, private loans became necessary to fill whatever funding gap remained.
This remains true today, just with a reduced cap on federal loans.
The point is that while the student loan landscape has certainly changed, the fundamentals remain the same.
So, while you may need to adjust your strategy, there’s no getting around that paying back student loans felt heavy before and still feels heavy today.
And, if you’re feeling the weight of your student loans, check out my top student loan tips for lawyers and professionals:
OK, on to the changes.
There are now only two federal loan repayment options.
Previously, the federal government offered seven loan repayment plans. There was a standard repayment plan and six other options to help borrowers pay back their loans while still affording their other monthly expenses.
Now, there are only two repayment options.
Option 1: The standard repayment option.
First, borrowers can still use a fixed-payment repayment plan known as a standard repayment plan.
This means borrowers can pay back loans in equal monthly payments spread over a defined period.
The previous law set the standard repayment period at 10 years. There were also graduated and extended options that reduced a borrower’s monthly payment but extended the years of required payments for up to 25 years (30 years, in some cases).
Similarly, the new law provides for a standard repayment plan. Borrowers may choose to make fixed payments for periods ranging from 10 to 25 years, depending on the size of the loan to be paid back.
Option 2: The income-driven option (RAP).
In addition to changes to the standard repayment plan, the new law made significant changes to income-driven repayment plans.
Now, borrowers can enroll in a single income-driven repayment plan, which is known as the Repayment Assistance Plan (RAP).
Previously, income-driven repayment options included:
- SAVE: Saving on a Valuable Education
- PAYE: Pay as You Earn
- IBR: Income-Based Repayment
- ICR: Income-Contingent Repayment
These plans determined your monthly payment based on how much you made and your family size.
Each option has now been replaced by RAP. One of the ideas behind RAP was to simplify the various income-driven repayment options into one combined plan.
With RAP, borrowers will pay 1% to 10% of their monthly income for up to 30 years. After 30 years, the remaining loan balances will be forgiven.
Notably, that’s a longer time period before loan forgiveness kicks in. Under the previous income-driven repayment plans, borrowers were off the hook after either 20 or 25 years. Now, borrowers will have to pay their loans back for 5 to 10 years longer before they are forgiven.
In addition, monthly payments depend on Adjusted Gross Income instead of discretionary income. This means monthly payments will increase for many borrowers.
There are new borrowing caps for some federal loans.
As mentioned above, the new law did not introduce the idea of caps on federal loans. Rather, it reduced the maximum amount for certain loans and eliminated other loan types.
The first change relates to Parent PLUS loans, which are loans for parents of undergraduate dependent students. The new caps for Parent PLUS loans are $20,000 per year and $65,000 total.
The next change relates to Grad PLUS loans, which are loans for higher education degrees. Basically, Grad PLUS loans are going away.
Instead, graduate students will have to take out Direct Unsubsidized Loans.
The significance is that Grad PLUS loans allowed students to borrow enough to cover the full cost of attendance for graduate school, minus any other financial aid received.
Now, professional students, like law students or medical students, may borrow $50,000 per year and $200,000 total.
Additionally, non-professional graduate students, like teachers, may borrow $20,500 annually and $100,000 total.
Why does all this matter?
Anyone who has paid for college or graduate school should immediately recognize the challenge here.
To oversimplify, college and graduate school is expensive.
These new limits mean that most students (or parents of students) will need private student loans to help pay for higher education.
Generally, private loans have less protections and are more expensive than federal loans. Private loans also can have tougher eligibility requirements, meaning less people may qualify for loans.
Add it all up and paying for higher education becomes more difficult for a lot of people.
Public service loan forgiveness remains the same, for now.
One last point to highlight sine there’s been some confusion on whether public service loan forgiveness changed.
As of now, public service loan forgiveness remains the same. People working eligible jobs and making loan payments for 120 months can still have their loans forgiven.
Say tuned as changes are most certainly coming. The likeliest change is going to be a reduction in the types of jobs that are eligible for loan forgiveness.
What can you do about these changes to federal student loans?
With these main changes to federal student loans in mind, the question is: what can you do about it?
Fair question.
The way I see it?
The changes happened.
The train has left the station.
So, let’s spend our energy thinking about strategies.
Look, I completely understand that anyone with loans, or soon to have loans, is feeling frustrated right now. Rightfully so.
“Frustrated” may be the wrong word. Please feel free to insert whatever word you want into that sentence that better captures your emotions.
I also wouldn’t blame you if you felt like yelling at the clouds for a few minutes.
But, once the frustration is out of your system, you still have two options.
You can either do nothing, get angry, and blame everyone else.
Or, you can take ownership, prepare, and educate yourself.
In today’s environment, there is no excuse for failing to educate yourself and coming up with a strategy for your personal situation.
Countless websites focus on the student loan industry. In just the past couple of weeks, there have been hundreds of articles and blog posts written on the changes.
If you stay mad and don’t take action, you have only yourself to blame.
It is up to each of us to take ownership over our personal finances.
From where I sit, the student loan changes are just one example of what we all have to deal with on our constant journeys towards financial freedom.
Laws change. Tax breaks change. Circumstances change.
It’s up to each of us to stay on top of the changes to continue moving towards financial freedom.
How do we stay on top of the changes, whether it’s student loans or anything else?
We can think and talk about money. I assure you that others feel the same way that you do right now. Talk to your people. Then, come up with a plan.
For starters, you can make reading a blog like this one part of your regular internet routine. As a reminder, I post three times every week on important money and life topics for lawyers and professionals.
You can also sign up for my weekly newsletter here.
Additionally, you can also pick up a good money mindset book, like The Simple Path to Wealth or Millionaire Milestones.
If you’re still frustrated, the biggest mindset shift is to stop hoping other people, including the government, fix your money problems for you.
By the way, this is advice I could have used recently, as well.
I foolishly got my hopes up with the new legislation.
Recently, I was not immune from getting my hopes up that the government would provide a big boost for my personal finances.
Personally, I wasn’t too concerned with the student loan changes because I paid off my loans already and my kids are still at least 13 years away from college.
However, I followed the bill closely because of the SALT proposals.
If you’re unfamiliar, SALT allows people who itemize their federal taxes to reduce their taxable income by the amount they pay in state and local taxes.
As a real estate investor and mesothelioma lawyer, SALT is very relevant to my personal finances.
I own four properties and earn W-2 income in Illinois, a high property tax state with a 4.95% state income tax. Plus, I own a property in Colorado.
I am in the category of people who would benefit from a high SALT cap or no cap at all.
At various points in the legislative process, there was possibly going to be no SALT cap, or a very high SALT cap, or no SALT deduction at all.
It was constantly changing. I was hooked.
In the end, SALT won’t have much impact for me at all. I’ll end up saving some money in taxes this year, but it could have been much more.
Unfortunately, I made the mistake of getting my hopes up that SALT was going to be a great boon for my family.
The lesson is that I wasted a lot of mental energy worrying about what the government might or might not do.
I should have used that energy to work on my blog, help my clients, or engage with my kids.
These would have all been better uses of my time and energy.
Take control of your money, whether it’s student loans or anything else.
I encourage you to take control of your money decisions, whether that means learning about the student loan changes or any other parts of the legislation.
The changes happened. More changes will come in the future.
Now, it’s up to each of us to strategize and plan accordingly so we can stay on top of our finances.
Were you impacted by the federal student loan changes?
What about any other changes to the legislation?
Let us know how you’re coping in the comments below.
