The changes coming to federal student loans in 2026
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Hello everyone, I'm Kimberly Adams. Welcome back to Make Me Smart, where none of us is as smart as all of us. For many federal student loan borrowers, the past few years probably felt like whiplash. You had the Biden administration attempting to pass the sweeping student loan forgiveness and create more affordable repayment options, but most of those ended up struck down or held up in court. As a result, many borrowers haven't had to make a payment in years. And then the one big beautiful bill act passed last year is set to overhaul the repayment system this year. So where we stand is a little bit confusing and it matters whether you have student loans or not. So here to make us smart about all of this is Betsy Mayotte, founder and president of the nonprofit, the Institute of Student Loan Advisors.
Welcome to the show, Betsy. Thank you. So like I said, the past several years have been kind of chaotic in the world of federal financial aid. What have you been hearing from student loan borrowers about this?
What major changes are coming to federal student loans in 2026?
Confusion, anxiety, feeling sort of stuck because they don't know what to do to successfully manage their loans because of all the changes. And is there going to be more changes? Yes.
So one of the developments that's been in the news for quite a bit was this Biden era save program. And now that that program is ending, can you tell us a bit about the program and what it means for I guess there's what, seven million borrowers still enrolled in the program?
Yeah. So the SAVE plan was another version of an income-driven repayment plan, of which we've had quite a few of those over the years, and those continue to exist. But it was the Biden administration's attempt to make student loans even more affordable, especially for people who have high debt compared to what their income is. It was also intended to provide, for some borrowers, a quicker... path to forgiveness after making a certain number of payments under that plan. Unfortunately, one of the many first time this ever happens, that plan was challenged in court by 13 attorney generals, state attorney generals. And it appeared like the court was leaning towards siding with those attorney generals, with the plaintiffs, that the administration had gone beyond the powers that had been afforded to them by Congress to create this plan.
And I'm oversimplifying, essentially because they felt it was more generous than Congress had intended. Since then, Congress themselves got rid of the SAVE plan as part of H.R. 1 last summer. And now we're just sort of waiting for this proposed settlement agreement. So the borrowers that are, these 7 million borrowers that are still in what we call the SAVE limbo, know what direction and at what point they do need to leave the SAVE plan.
And is this a difference between their loans being forgiven or being lower? Like, what are they waiting on?
Well, right now, the people that are still in the save limbo are in forbearance, meaning that there's no payment due at all. But it also means that they're not progressing towards loan forgiveness under a different income-driven repayment plan or perhaps loan forgiveness for public service loan forgiveness or even... just paying their loans off. So once the settlement is finalized, they will be forced off of this save forbearance and be forced to choose a different repayment plan. And for almost all of them, that is going to mean a higher monthly payment than what they had under the save plan. And borrowers that may have been eligible for forgiveness sooner may have to wait longer to get loan forgiveness under a different income-driven repayment plan.
Who are these borrowers?
Well, that's a great question. They're your friends, neighbors, family members. You know, I think a lot of people still fit, including policymakers for that matter, think that the student loan issues are a young person's issue. And that couldn't be further from the truth. Half of all federal student loan borrowers are over the age of 30, a quarter are over 45, and the fastest growing population of consumers that carry federal student loan debt are the over 65s.
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