Current Student Loan Changes 2028: What Borrowers Must Know

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If You Have Student Loans Right Now: Critical Changes Coming by 2028

Today we are going to go a little deeper into our student loan situation that has changed as a result of the big beautiful bill. Last time I told you about the law changes, this time I want to talk to you and/or your children and/or your grandchildren or anybody you know who currently has student loans so they can understand how this law change is going to affect their current payment.

That's a big deal, so you may want to be forwarding this message on to those people so they can hear how this is going to change over the next year because we have time to plan, but those of you who are making payments need to not sleep on this.

You're Not Getting Thrown Off a Cliff Tomorrow

If you currently have student loans, you need to understand that you're not being thrown off a cliff tomorrow, but there are really big changes and they're coming by July of 2028—that is the deadline.

Now in my experience with people as a financial planner, most people think about planning but don't actually do the planning. There are over 40 million people who are current student loan borrowers that actually need to understand what's happening.

The Good News: You Have Time

The good news is that if you are currently making payments on your student loans, you have until July 1, 2028 to choose one of the two new repayment plans. So we have about three years to figure out the best option and you won't automatically be kicked off your current plan immediately, but there are some things that you're used to that are going away.

URGENT: Parent PLUS Loans Need Action by 2025

Parents, those of you who have parent PLUS loans, you have urgent action needed. You only have until July of 2025—that's basically like a year from today—to consolidate your loans, and if you miss that deadline you're going to be permanently locked out of any income-driven repayment plan.

So you'll be stuck with a standard repayment plan which are going to have much higher payments. This is one of those most time-sensitive deals for anybody that's a current borrower, and if you need to sit with me and have me help you think through this, get on my books so I can help you think through what we want to do as far as your parent PLUS plans are concerned.

The Safety Net is Disappearing

Another thing we need to understand is that the safety net is disappearing. That safety net has been job losses and hardship deferments. I can't tell you how many times I've seen people come in and say, "Hey Leanne, help me figure out how to do this because I just lost my job." Unfortunately, that is going away.

If you currently have student loans that are outstanding, you get to keep your existing deferment rights for your current loans, but any new loans that you take after July 1 of 2027—in other words, if you're currently a student you're probably still taking loans—that protection will be gone.

The economic hardship deferments are completely eliminated. Let me say that again: the job loss and hardship deferments are completely eliminated for all new loans. So if you lose your job in 2028, you still got to pay if you have post-2027 loans.

Don't be mad at me, I didn't write the law—I'm just the messenger.

What's Being Eliminated: Four Repayment Plans Are Gone

If you're in a borrowing cycle, I want you to understand that what's being eliminated is four specific types of repayment plans.

The SAVE plan, which was Biden's most generous plan, is gone. The Pay As You Earn plan is gone. The Income Contingent Repayment plan is gone. Those will be completely out of the equation by July 2028.

So we need to be planning for how income is going to flow if you're in a borrowing cycle.

Public Service Loan Forgiveness: It Survives, But...

If you're a borrower that has been hoping for one of those public service loan forgiveness programs, otherwise known as the PSLF programs, that program actually survives this bill, but going forward only the new repayment plans will count towards your public service loan forgiveness.

Current borrowers, if you're in one of those programs, you can finish under those existing rules, but if you're hoping to get a degree as a social worker and have that forgiven in your future, good luck with that.

What Do We Do Now?

First of all, if you have current student loans, you need to contact your student loan servicer and start to begin to use the new federal student aid calculators, and of course, be aware of scams. I can't tell you how many times I've seen people come in here trying to consolidate or reduce their payments and have found themselves in a scam.

The Bottom Line

You're not getting thrown off a cliff immediately with how much you're going to have to pay back with your student loans—in other words, your monthly payment—but the safety nets are disappearing, they just are, and what's happening is higher payments are coming for most people. So we need to plan now and we need to not put this off forever.

Just so happens that you know a financial planner who cares about you.

Again, if you'd like to talk through these options with me or figure out what your plan is going to be for your existing student loan payments, or if you're a parent considering taking the subsidized parent loans, then we need to talk before you make those agreements because this kind of stuff has a big impact on your financial security moving forward.

If you want to talk to me, you know how to find me.