If you have federal student loans, July 1 is a date you need on your calendar.

More than 40 million Americans hold federal student loan debt, and starting next week, the rules governing how that debt is repaid, borrowed, and forgiven are changing dramatically under President Trump's One Big Beautiful Bill Act. Here's what's actually shifting.

The SAVE Plan Is Officially Ending

Roughly 7 million borrowers currently enrolled in the Biden-era SAVE repayment plan will need to choose a new plan, according to Newsweek.

Loan servicers will begin sending 90-day notices starting July 1.

Borrowers who don't act in time will be automatically placed into a Standard or Tiered Standard repayment plan — and for many, that means a higher monthly payment.

Two New Repayment Plans Take Over

For new borrowers taking out loans on or after July 1, there are now only two options: a new Repayment Assistance Plan (RAP) and a Tiered Standard Repayment Plan.

RAP ties monthly payments to a borrower's adjusted gross income — roughly 1 to 10 percent depending on earnings, per Newsweek — and offers forgiveness after 30 years, along with interest waivers and principal reduction incentives.

The Tiered Standard plan splits payments based on debt size: 10 years for balances under $25,000, up to 25 years for balances of $100,000 or more.

Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, told Newsweek the shift is significant: "Starting next week, there will be one consolidated income-based repayment plan, and unlike past efforts, a minimum payment will be required each month."

PAYE And ICR Are Being Phased Out Too

Two other income-driven plans, Pay As You Earn and Income-Contingent Repayment, will stop accepting new enrollees on July 1 and be fully phased out by 2028, per Newsweek.

Income-Based Repayment (IBR) remains the only legacy plan that survives long-term for existing borrowers.

New Borrowing Caps Hit Parents And Grad Students Hard

Parent PLUS loans are now capped at $20,000 per year with a $65,000 lifetime limit per student, according to Newsweek. Graduate students face a $20,500 annual cap with a $100,000 lifetime limit, while professional degree students are capped at $50,000 annually with a $200,000 lifetime limit, per the U.S. Department of Education.

A new overall lifetime cap of $257,500 now reportedly applies across all federal Direct loans combined (excluding Parent PLUS).

Kevin Thompson, CEO of 9i Capital Group, told Newsweek the impact could push families toward costlier alternatives: "The higher interest rates being charged will come at a significant cost for those borrowing money, and the caps on the amounts borrowed will force many to forgo higher learning or take on private loans with higher rates."

Grad PLUS Loans Are Gone For New Borrowers

The Grad PLUS program, which previously let graduate students borrow up to their full cost of attendance, ends for new borrowers starting July 1, according to Newsweek.

Existing borrowers may continue under current terms in limited cases tied to their specific program and school, per Harvard's Student Financial Services office.

Public Service Loan Forgiveness Rules Are Getting Stricter

Beginning July 1, Education Secretary Linda McMahon will have new authority to disqualify employers from PSLF eligibility if she determines they have a "substantial illegal purpose," according to Newsweek.

Last year, the Department of Education listed examples including "terrorism, child trafficking, and transgender procedures that are doing irreversible harm to children," per NPR. Several major cities have already sued over the change.

A Small Incentive For Auto-Pay

The Department of Education is also offering a 1 percent interest rate reduction for borrowers enrolled in auto-pay, available through June 30, 2028, according to Newsweek.

"The Trump Administration is making student loan repayment easier than ever, and borrowers should not wait to take advantage of this temporary interest rate reduction," said Under Secretary of Education Nicholas Kent.

What To Do Now

If you're currently on SAVE, watch for your servicer's notice and don't ignore the 90-day window — failing to choose a plan means getting automatically placed into one that may not work in your favor.

Borrowers not currently taking out new loans can generally stay on their existing plans, including IBR, until July 1, 2028.

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Stan Bell