The Indicator from Planet Money - What you should know about your student loans

Episode Date: June 29, 2026

For many of the 43 million Americans with federal student loans, July 1 is a day to mark on the calendar. Trump’s One Big Beautiful Bill Act is introducing stricter borrowing caps and new repayment plans. Today on the show, we talk with NPR’s Education Reporter Cory Turner about the impact.Fact checking by Sierra Juarez.Your Next Listen — Will new loan limits lower the cost of grad school?Connect with The Indicator — Sign up for The Indicator’s brand new newsletter— Buy the Planet Money book— Find our socials, YouTube and more!— For sponsor-free episodes, subscribe to NPR+ See pcm.adswizz.com for information about our collection and use of personal data for sponsorship and to manage your podcast sponsorship preferences.NPR Privacy Policy

NPR. This is the indicator from Planet Money. I'm Adrian Ma. After home and auto loans, student loans are the third largest category of debt that consumers hold. Now, the vast majority of these are issued through the federal government. And some 43 million people have federal student loan debt. So if this is you, or you're thinking about taking out a new loan, then July 1st is a date you should pay attention to, because big changes are coming to this very big program. It's huge.

And it's huge because it's not one thing. It's not two things. It's, you know, I can name a dozen things off the top of my head, large and small that are changing, that will affect, in all, probably most borrowers. Corey Turner covers education for NPR. And some of them will be felt immediately, and others could end up changing the system considerably without anyone ever really noticing or understanding,

huh, why did that happen? Yeah, why is this happening? And what did these changes mean for current and future borrowers? That is what we're talking about on today's show. After the break, we'll have a conversation with Corey about the biggest overhaul to the federal student loan system in decades. About a year ago, Republicans in Congress passed a sprawling piece of legislation, the so-called One Big Beautiful Bill Act. And among its many provisions, a major overhaul of the federal student loan programs, NPR's Corey Turner says these changes, which go into effect this week, will affect just about everyone who

has a student loan or is thinking about getting one. Let me just tick through the biggest ones in my mind. So, number one, we know there's still roughly seven million borrowers in the Biden era repayment plan known as save. Right. This was a Biden administration program that launched in 2023, but then some Republican-led states, they filed a lawsuit against it, arguing that it was federal overreach and it would cost taxpayers in a long run. And so it got tied up in the courts and now save is over. And so those borrowers starting July 1st, they need to choose a new repayment plan. And if they don't do that within roughly 90 days, they're going to be put into the least generous, least flexible repayment plan. Also, July 1st, they're essentially for new borrowers

phasing out all of the other old repayment plans. They're creating two new repatriation plans. They're creating two new payment plans, one is essentially a new and improved standard plan, where basically your monthly payment is the same month after month, year after year. And then the other plan is based on your income. So the less you make, the less you pay. Also, anyone looking to take out graduate student loans a huge change. Now, unless they're pursuing a medical degree or studying like clinical psychology or dentistry, they're going to be capped at $20,500 a year. That's a pretty severe limit compared to unlimited borrowing of recent years. So what are these changes ultimately aimed at accomplishing? Oh, there are a couple different answers here, Adrian.

Number one, let's just be honest, the bill needed to save money because it was an enormous... The one big beautiful bill. Yeah, it was an enormous tax bill. Right. Expected to cost. trillions of dollars over the next decade or so. That's right. And one of the ways to just get the math to math was to cap graduate student loans. But there are also other reasons at play here. If you look at, say, the income-driven plan, the new one, the repayment assistance plan, monthly payments on that plan compared to past income-driven plans, they're going to be higher. And part of the purpose here from Republicans, really is to jumpstart federal student loan repayment, to try to get the system back on the rails.

The COVID pandemic really devastated our student loan infrastructure. Everything just ground to a halt and it stayed there. Well, part of that was a way of, I guess, trying to ease the burden for some people during the pandemic is to say, like, we're not going to be collecting on student loans for a while. That's right. But what happened was we never really. eased people back into it because the Biden administration's signature effort at trying to do that was the save repayment plan. And eight million people signed up for it. And then lawsuits essentially

froze the plan in its tracks. And that meant borrowers didn't have to make payments. And so part, I think, of the point of this July 1st reset is the Ed Department is pouring a ton of resources into trying to get borrowers back into the habit and, and frankly, repaying their federal student loans. So what is the expected impact for the borrower is going to be of this? Is it expected to make it easier for them to keep up with their loans or harder? I think with Republicans' repayment assistance plan, you know, it's not a draconian plan compared to the Biden-era save plan. But it is less flexible and it will be less generous. Monthly payments will be higher. It's no secret that right now we're in a pretty precarious spot with a federal

student loan program with 12 million borrowers either in default or quickly sliding in that direction. And nobody, regardless of the D or the R behind their name, nobody wants to see more defaults in the program. You know, default doesn't help anybody. It doesn't help the government, and it really doesn't help borrowers. And so I think what you're seeing July 1st is, is the administration and Republicans best efforts to try to meet borrowers where they are and get them back into repayment. What about student loan forgiveness programs? Is anything happening with those? All right. So I'm going to get a little nerdy here, Adrian. Number one, please, we love it.

We love nerdy. The program public service loan forgiveness, which is essentially a quid pro quo with the government. You work for 10 years as a nurse, a firefighter, police officer, teacher. And after 10 years and 120 monthly payments towards your loans, you get the rest forgiven. That program remains. It is intact. It is still available. Other forms of forgiveness, though, traditionally have come at the end of a term embedded

in an income-driven repayment plan. So after 20 years or 25 years of payments, those are changing a bit. The brand new Republican income-based plan called the repayment assistance plan, it stretches that window to 30 years. And everybody I've talked to who knows the thing about student loan math says, hardly anyone is going to qualify for any kind of forgiveness on this plan because you will have paid off your debts before you reach 30 years. So that's a problem for newer borrowers. That's the only income plan they'll qualify for. But is there any sense of what that will mean for borrowers then? Will we see more borrowers in default or fewer people taking out federal loans? Oh, those are the million dollar questions, Adrian.

Again, there are some seven million borrowers who are still enrolled in the Biden-era save plan. They need to change plans. And it's a huge question. Will they all enroll in a new plan? If they don't and they're automatically put in the standard plan, will they actually begin repaying loans or will we just see default skyrocket? It's possible, and I'd be lying if I told you I knew what was going to happen. I do think overall, we've spent a really long time now, what, six, seven years focused on student loan forgiveness, on helping borrowers bear the burden of rising college costs. And I think that conversation, that political conversation anyway, ended with the Biden administration.

And I think that requires a sort of mental reset for borrowers, too, who are going to have to come to grips with the fact that in spite of years of talk about loan forgiveness, they're going to have to get back to the business or start for the first time ever repaying their loans. Corey Turner is a correspondent and senior editor for NPR's Education Desk. If you want to know more information about how these loans can specifically affect you, he's written a really helpful guide on npr.org. We'll drop a link to that in the show notes. And if you can't get enough, Corey, listen to Planet Money this week. He and the Plan of Money crew look into whether making student loans less generous could actually bring down the cost of school.

This episode was produced by Corny Bridges with engineering by Travis Hagan. It was fact-checked by Sierra Juarez, Kankin Canada is our editor and the indicators of production of NPR.