The latest overhaul of federal student loans is about to hit borrowers hard. Starting July 1, 2025, new federal student loans will come with stricter repayment terms, fewer protections, and a longer path to forgiveness. The changes, buried deep within the One Big Beautiful Bill, will reshape how Americans manage student debt.
Borrowers who lose their jobs will no longer qualify for unemployment deferment. Financial hardship won’t be enough to pause payments either. The only option left is forbearance, but even that is capped at nine months within any 24-month period. This means payments will keep coming, regardless of personal circumstances.
The new repayment plan sets a minimum payment of $120 per month or 10% of income, whichever is higher. Loan forgiveness will only be granted after 30 years and 360 qualifying payments. This extended timeline locks borrowers into decades of financial obligations, exposing their credit to long-term risk.
Universities have long relied on federal loans to keep tuition revenue flowing. The question now is whether these new rules are designed to deter students from borrowing or simply ensure they keep signing on the dotted line. Either way, the financial burden on borrowers is increasing.
The student loan system is shifting, and borrowers must prepare for the impact. The days of flexible deferment and quick forgiveness are fading. The government is tightening its grip, and the consequences will be felt for years to come.
Sources:
https://thecollegeinvestor.com/57160/congress-unveils-plan-to-change-student-loan-repayment-plans/