You can have the Newsbeat regularly delivered to your mailbox so you never miss any news. This is a free service -- you can unsubscribe any time. Enter your email address and click the submit button; then confirm your subscription from your email.

Big changes arrive July 1 for student borrowers, including repayments

by

The federal student loan system is set to undergo major changes beginning July 1, with critics warning the overhaul could make borrowing more expensive and push more students toward private lenders.

The changes stem from congressional Republicans’ tax and spending cut law signed by President Donald Trump last year. New regulations finalized May 1 by the U.S. Department of Education implement sweeping revisions to federal student lending and repayment programs.

Among the most significant changes is the elimination of the Grad PLUS loan program for new borrowers. The program previously allowed graduate and professional students to borrow up to the full cost of attendance. Current borrowers may continue using Grad PLUS loans until they finish their programs or for up to three more years.

New annual and lifetime borrowing caps will also take effect. Graduate students will be limited to $20,500 annually and $100,000 total, while professional students, such as those studying law or medicine, may borrow up to $50,000 annually with a $200,000 aggregate cap. Parent PLUS loans will be capped at $20,000 annually and $65,000 total per dependent student.

The department said the changes are intended to lower college costs, simplify repayment and restore accountability to the federal lending system. The average federal student loan balance currently stands at nearly $40,000.

The new rules also replace existing repayment programs with two new plans: the Repayment Assistance Plan, or RAP, and the Tiered Standard plan. RAP is income-based and waives unpaid interest for borrowers making qualifying payments, while the Tiered Standard plan offers fixed repayment schedules ranging from 10 to 25 years depending on loan balances.

Critics argue the changes could leave many students with fewer affordable options. Michele Zampini of the Institute for College Access & Success said repayment costs will increase for many borrowers, while Victoria Jackson of EdTrust warned that more students may be forced to rely on private loans or abandon graduate education altogether.

The transition comes as the Trump administration continues efforts to reduce the role of the Education Department, including transferring federal loan collection responsibilities to the Treasury Department.

Source: PA Capital-Star

>