Changes from the One Big Beautiful Bill Act (OBBBA) are taking effect this year as money is removed from student loan borrowers’ accounts who have not been actively paying or seeking alternative methods to pay back their loan balances.
In July 2025, following President Donald Trump’s return to office, a Republican-led Congress passed the act, which includes cuts to federal assistance programs such as health care, food, student loans and energy resources, as well as significant changes to taxes, credits and deductions.
One of the most notable changes to student loans will be the elimination of President Joe Biden’s “Saving on a Valuable Education” SAVE Plan. SAVE was an income-driven repayment plan that capped borrowers’ payments at five percent of their discretionary income and included an interest subsidy that prevented balances from growing due to unpaid interest. It also allowed borrowers with low balances to qualify for loan forgiveness in as little as 10 years.
In a Dec. 7 press release, the Department of Education (DOE) announced it would not enroll new borrowers into the SAVE program, criticizing the plan as a “burden on taxpayers.” The Repayment Assistance Program (RAP) will replace SAVE and set restrictions on borrowers’ ability to use other payment programs.
Beginning July 1, RAP will be the only repayment option available to borrowers taking out new direct loans. Borrowers with existing loans, who take out additional loans on or after July 1, will also be required to repay their Direct loans under RAP. As a result, they will lose any benefits previously applied to their existing loans.
For graduate and professional students, President Trump will eliminate a repayment option that has aided students in covering the full cost of their attendance. Commencing July 1, the Graduate PLUS Loan program will end.
The Graduate PLUS loan program has served as a long-standing option for federally funded loans, allowing graduate and professional students to cover all of their indirect and direct costs of attendance. In July, the OBBBA will cap annual loans for new borrowers at $20,500 for graduate students and $50,000 for professional students.
The bill also sets limits on the amount of money provided by the PLUS loan program for undergraduate students. Borrowers will have an annual limit of $20,500 and an aggregate limit of $65,000 per dependent student.
In terms of how these changes will impact students, Dr. Gerald Daniels, an associate professor of economics at Howard University, says it depends on the field of study. Daniels went on to explain that the best thing students can do is understand the returns to their education.
“Your borrowing should be consistent with what your objectives are, professionally and personally, and not getting yourself into debt that is beyond what you’re comfortable taking out,” said Daniels.
According to the National Association of Student Financial Aid Administrators, these changes will result in many institutional challenges. Students and parents may be forced to look into private lenders such as banks, credit unions, state agencies or a school to fund their education.
Some of the most popular choices for financing are Sallie Mae, College Ave, SoFi and Funding U. These loans often have stricter credit and academic requirements as well as fewer borrower protections and repayment options.
During the week of Jan. 7, the DOE began sending wage garnishment notices to defaulted borrowers. Wage garnishment allows loan holders to order employers to withhold up to 15 percent or ensure a weekly deposit of $217.50 from one’s disposable pay to collect defaulted debt. According to Federal Student Aid, borrowers will receive a notice of the department’s intent to garnish their wages 30 days prior.
National advocacy organizations, including the National Association for the Advancement of Colored People, have condemned the wage garnishments. In a coalition letter sent on Jan. 7, the organization urged the Department of Education to reconsider the decision.
“The decision to resume wage garnishment against millions of borrowers amidst a growing affordability crisis crushing working families is calloused and unnecessary,” the letter said. “Borrowers have been forced to wait amidst a nearly 1 million application backlog for an Income-Driven Repayment (IDR) plan. Mass layoffs have made it even harder for borrowers to get help with their student loans.”
As borrowers struggle to afford living expenses, many also struggle to enroll in alternative payment methods such as IDRplans, which are designed to make payments more manageable for low-income workers and families.
Wage garnishment can damage a borrower’s credit score, limiting their ability to access credit cards, secure car loans or obtain housing.
The threat of wage garnishments has left many borrowers uncertain about what comes next. For those at risk, Daniels recommended contacting their student loan servicer to see available repayment options.
For Howard University students beginning to consider how they will repay their loans after graduation, Daniels also suggests using a loan simulator to estimate monthly payments, explore eligible repayment plans and understand the minimum amount owed over the life of the loan.
“I would recommend starting as early as you can, looking at your estimated payments, so you understand what you’re required to pay, and that way you have a better understanding of what you’re dealing with,” said Daniels.
Copy edited by Kennedi Bryant
