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College graduates in the Class of 2026 are stepping into a much different student loan environment. Compared to previous years, there are fewer repayment options and rules regarding debt forgiveness have become stricter.
The changes to the federal lending system follow the passage of President Donald Trump’s “Big and Beautiful Act” last year and other policy changes enacted by the Trump administration.
According to the National Center for Education Statistics, approximately 2 million students earn a bachelor’s degree each year.
Roughly 60% of these students have education loans, with an average balance of about $30,000, according to an analysis by higher education expert Mark Kantrowitz. The typical monthly student loan bill is $304.
In light of recent changes, here’s what this year’s graduates need to know about federal student loans.
You still have 6 months until your first bill is due
Nancy Nearman, assistant director of New York’s Education Debt Consumer Assistance Program, said one important safety net for federal student loan borrowers remains intact: Thanks to the government’s forbearance period, the first bill likely won’t be paid until six months after graduation.
People with federal Perkins loans have up to nine months before they need to start making repayments.
If the loan is subsidized, the government will pay interest during the grace period, Kantrowitz said. On the other hand, unsubsidized loans accrue interest.
“Once the grace period is over, the loan status switches to ‘in repayment,’” Nierman said. Probably around December.
The exact date depends on factors such as loan details and graduation date.
Kantrowitz said you should mark your calendar about two weeks before your first payment is due to avoid missing it.
Student loan repayment options are changing
Betsy Mayotte, president of the nonprofit Association of Student Loan Advisors, said college graduates should start thinking about the repayment options that are best for them starting this summer.
Options are changing. While some plans have been retired or will be retired, new options are scheduled to launch in July of this year.
The Biden administration’s Savings for Valuable Education (SAVE) plans, which had the lowest monthly fees ever, are no longer available. Students graduating in the spring will also not have access to the new tiered standards plan, according to the U.S. Department of Education.
However, starting July 1, borrowers can now enroll in a new repayment assistance plan. With RAP, monthly payments typically range from 1% to 10% of revenue. The more you earn, the more payments you will need to make. The minimum monthly payment is $10 for all borrowers.
According to the Department of Education, if all your student loans were paid off before July 1 of this year, you are still eligible for the plans below.
Standard repayment plan Graduated repayment plan Extended repayment plan Income-based repayment plan, or IBR Income-based repayment plan, or ICRPay as You Earn, or PAE
“They can read about these plans on Studentaid.gov and use a loan calculator to see both monthly payments and long-term costs,” Mayotte said.
“It’s important to not only consider the option with the lowest monthly payment, but also, more importantly, the option with the lowest long-term costs,” she added. “The name of the game is the least amount paid out over time.”
Spring graduates who return to school after July 1 and end up taking out student loans again will have more limited repayment options, Nearman said. They will only have access to the new tiered standard plan and RAP, she added.
Federal loan forgiveness rules become stricter
After graduation, consumers should also check to see if they qualify for state or federal debt forgiveness programs, consumer advocates say.
The Public Service Loan Forgiveness Program, signed by former President George W. Bush in 2007, allows government and nonprofit employees to have their federal student loans forgiven after 10 years.
But President Trump last year signed an executive order saying that borrowers employed by organizations whose work involves “illegal immigration, human smuggling, child trafficking, extensive damage to public property, and disruption of public order” are “ineligible” for PSLF. These changes are scheduled to take effect in July, but they face legal challenges.
Consumer advocacy groups criticized the new restrictions, saying Trump administration officials could exclude organizations they don’t like from the program. In the meantime, borrowers can use the PSLF Help Tool to search the list of employers eligible for the program.
Most state-level student debt forgiveness programs offer relief to borrowers in certain professions, Kantrowitz said. For example, the Maine Dental Education Loan Repayment Program provides a total of $100,000 in student loan repayment assistance to dentists in underserved areas of the state.
Other state programs may offer exemptions based on economic status rather than occupation.
In New York State, the Get On Your Feet loan forgiveness program, introduced in 2015, allows certain residents to receive loan forgiveness for up to 24 months of payments. Among other eligibility requirements, borrowers must have an adjusted gross income of less than $50,000 per year.
The Institute of Student Loan Advisors has a database of student loan forgiveness programs by state.
