Core Insights - The student loan landscape has faced significant turmoil over the past year, with legal challenges and a processing backlog affecting borrowers, culminating in a critical deadline of December 31, 2025, for those eligible for loan forgiveness [1] Group 1: SAVE Plan Developments - The Saving on a Valuable Education (SAVE) Plan, a Biden-era initiative linking debt repayments to borrower income, has been effectively terminated due to ongoing legal challenges, impacting seven million borrowers [2] - Borrowers enrolled in the SAVE program, as well as those who applied, must transition to alternative repayment plans due to the program's conclusion [2] - Current repayment options include Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), and Pay As You Earn (PAYE), with ICR and PAYE set to phase out by July 2028, aligning with the sunset of the SAVE program [3] Group 2: Tax Implications of Loan Forgiveness - Loan forgiveness under income-driven repayment (IDR) programs was exempt from taxation until the end of 2025, as per the American Rescue Plan Act of 2021, but this tax exemption will not be extended, leading to potential tax liabilities for borrowers starting January 1, 2026 [4] - A group of Democrat senators has urged the administration to utilize existing administrative authorities to mitigate the impending tax implications for working-class families facing the IDR "tax bomb" [5]

Core Insights - Major changes to the federal student loan system will take effect on July 1, 2026, primarily due to the Trump administration's One Big Beautiful Bill Act (OBBBA) [1] Group 1: Repayment Plans - New repayment options will be limited to two plans for loans disbursed after July 1, 2026, while existing borrowers can continue with three current plans until they transition [2] - Current income-driven repayment plans (PAYE, ICR, IBR) will phase out, with PAYE and ICR ending by July 1, 2028, leaving IBR and the new Repayment Assistance Plan (RAP) as options for future borrowers [4][3] - The RAP will set payments based on income, with potential forgiveness after 30 years [7] Group 2: Borrowing Limits - Federal borrowing limits will tighten starting July 1, 2026, with part-time students facing reduced limits based on enrollment status [11] - Current borrowers can access previous borrowing limits for three years or until program completion, with graduate students able to borrow up to $20,500 annually [12][16] Group 3: Grad PLUS Loans and Parent Loans - The Grad PLUS loan program will be eliminated after July 1, 2026, affecting graduate and professional students seeking financing [13] - Parent PLUS loans issued after July 1, 2026, will not qualify for Public Service Loan Forgiveness (PSLF), limiting options for future borrowers [17][18] Group 4: Deferment and Tax Implications - New loans will not be eligible for economic hardship or unemployment deferments starting July 1, 2027, and forbearance will be limited to nine months within a two-year period [20] - Student loan forgiveness may become taxable again after 2025, impacting borrowers who receive forgiveness in 2026 or later [21] Group 5: Preparation Steps - Borrowers are advised to review their current repayment plans, compare future options, and note key deadlines to prepare for the upcoming changes [22][23] - Parent borrowers should act quickly to access income-driven plans or PSLF eligibility, and consider potential tax implications of loan discharge [25]

Core Insights - The article addresses the challenges faced by recent graduates, particularly in managing student loans before securing employment [1][2] Group 1: Deferment Options - New graduates often struggle to manage living expenses and loan payments without income, making deferment options crucial [3] - Federal student loans typically offer a six-month grace period post-graduation, during which payments are not required, although interest may accrue on private loans [3] - Making small payments during the grace period can help reduce long-term interest costs [3] Group 2: Income-Driven Repayment Plans - Most federal borrowers qualify for income-driven repayment plans, which adjust monthly payments based on income [4] - Plans such as Pay As You Earn (PAYE), Income-Based Repayment (IBR), and Income-Contingent Repayment (ICR) provide options for managing payments and potential forgiveness of remaining balances after a set term [5] - PAYE caps payments at 10% of discretionary income, while IBR bases payments on income and family size, forgiving balances after 20 or 25 years [5]