Student loan borrowers could see payments spike under Trump's ‘big, beautiful' bill: ‘People are panicking right now'
Changes under the GOP spending bill will hit borrowers taking out loans next summer and any point after – as well as the 8 million Americans stuck in limbo on the Biden-era SAVE plan, also known as Saving on a Valuable Education, which has been on a repayment pause for a year.
Under the proposed budget, which is awaiting final approval in the House, a typical borrower will see their monthly student loan payments jump by hundreds of dollars, according to an analysis from research nonprofit Student Borrower Protection Center.
3 Sens. John Barrasso, John Thune and Mike Crapo speak to reporters following the budget approval on Tuesday.
AP
'People are panicking right now. I am getting the calls, the emails from friends and family members to strangers. People are naturally really super scared,' Erica Sandberg, consumer finance expert at BadCredit.org, told The Post.
The most drastic change is the end of the SAVE plan, which is used by millions of low- and middle-income Americans in debt. Monthly payments for this plan are calculated as 10%, 15% or 20% of a borrower's discretionary income.
Its Trump-era replacement, the Repayment Assistance Plan or RAP, will calculate monthly costs as between 1% to 10% of a borrower's discretionary income.
That might sound like an improvement – but unlike SAVE, this new plan does not use a payment cap, meaning many could end up paying a higher cut of their income than they previously did.
'There's some misinterpretation of who is in those low-income budgets,' said Sandberg, adding that her sister, a college professor with knowledge of the financial system, used the SAVE plan and now has to pivot or foot a higher bill.
The only other option for borrowers if the GOP bill passes would be the standard plan, which already exists but will see some tweaks.
The new standard plan will give borrowers a fixed monthly payment to have their loans paid off between 10 to 25 years, depending on the size of the loans.
3 The GOP spending bill will leave borrowers with two options: the Repayment Assistance Plan or the standard plan.
REUTERS
The current standard plan uses a 10-year period, regardless of loan size.
'Now you actually do have an option with those standard plans,' Sandberg told The Post, though she warned borrowers to use caution when selecting a repayment plan.
'The one that offers the lowest payments may not be to your financial benefit. Are you going to be in debt for twice the amount of time and more than twice the amount in finance fees?'
Borrowers will also lose the ability to petition for their remaining balance to be waived after 25 years under the new plans, Sandberg said.
3 President Trump, accompanied by House Speaker Mike Johnson, speaks to reporters in May.
Getty Images
But these changes are still up in the air, as the budget – which narrowly passed the Senate Tuesday – heads to the House for final approval, which Trump is expecting on his desk by a self-imposed Fourth of July deadline.
In the meantime, borrowers should focus on keeping their accounts in good standing. That means working with a lender on forbearances or deferments if it's impossible for you to make payments on time, Sandberg said.
Fearful student loan borrowers should use calculators, like the government's loan simulator on studentaid.gov, and 'try to fit your budget within the most feasible and affordable plan for you,' she said.
Explore Student Loan Lenders
SoFi
SoFi offers student loan refinancing and private loan options with competitive interest rates, flexible repayment terms, and no hidden fees. It's a popular choice for those looking to save on interest or monthly payments. With added perks like career coaching, financial planning tools, SoFi goes beyond lending to support long-term financial wellness. Learn More
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College Ave simplifies the student loan process with customizable repayment plans, competitive fixed or variable interest rates, and a quick, hassle-free online application. Whether you're taking out a new loan or refinancing, the company offers flexible terms and helpful tools to fit your budget, making it a smart option for students and parents alike. Learn More
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Sallie Mae offers private student loans with a variety of repayment options, no origination fees, and competitive interest rates tailored to undergraduate, graduate, and professional students. Sallie Mae also provides tools, scholarships, and credit-building opportunities to manage education costs with confidence. Learn More
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