What’s Going on With Federal Student Loans?

Since the Trump administration took office in January 2025, federal officials have made numerous changes to student aid and loan programs, many of which went into effect on July 1. 

Notably, the administration’s efforts to restrict eligibility to the Public Service Loan Forgiveness program have been thwarted, thanks to a major court win by NEA and others.   

What do NEA members who already have student loans need to know? 

1. If you’re repaying loans, you may need to select a new payment plan. The SAVE plan officially ended in March. Now, the Department of Education (ED) is sending letters to the roughly 7 million people previously enrolled in SAVE, providing them with 90 days to choose a new payment plan. If you do not respond, you will automatically be enrolled in the Standard Tiered Plan, which does not qualify for Public Service Loan Forgiveness. 
2. NEA members have two ways to switch their plans, either through the NEA Student Debt Navigator (which is free for NEA members) or through their StudentAid.Gov account.  
3. You should take a look and compare income-based repayment plans. These are plans that calculate your monthly payment based on how much money you make and the size of your family.Today, with the elimination of the SAVE plan, borrowers with existing loans have four IDR plan options: the new Repayment Assistance Plan (RAP), as well as the older Pay As You Earn (PAYE) Plan, Income-Based Repayment (IBR) Plan, and Income-Contingent Repayment (ICR) Plan. Note: Borrowers with loans disbursed before July 1, 2026, have until July 1, 2027, to enroll in IBR, PAYE, and ICRE, but PAYE and ICR will be eliminated on July 1, 2028, at which time borrowers enrolled in those plans will have access to the RAP plan and a revised version of IBR. All of these plans qualify for Public Service Loan Forgiveness, which forgives the balance of your loan after 120 on-time, monthly payments.  
4.  If you don’t choose an income-based repayment plan—within 90 days of receiving the letter from the ED—you will be automatically placed into the Standard Tiered Plan. Under this plan, your monthly payment is driven by the amount you owe, your interest rate, and the term of your loan. If you owe less than $25,000, you will be given 10 years to repay your loan. If you owe $25,000-$50,000, you will be given 15 years. For those owing more than $100,000, the term is 25 years. Payments made under this plan do not count towards PSLF.
5. To figure out what’s best for you, use the NEA Student Debt Navigator. 

What do NEA members who are still borrowing, or may borrow in the future, need to know?  

1. You face new limits on borrowing, starting July 1. The Trump administration has capped the amount that students can borrow through federal student loans. For people seeking “professional” degrees, as defined by the Trump administration, the limit is $50,000 a year with an aggregate limit of $200,000. For other degrees, which include most education-related degrees, the limit is $20,500 a year with an aggregate cap of $100,000. There are also new limits on Parent Plus loans: $20K per student per year, and a lifetime aggregate of $65,000 per student. (This change does not apply to students who took out loans before July 1, and are still studying the same program at the same school.)  

2. You may no longer be eligible for Pell Grants. If you receive grants or scholarships that cover the entire cost of your attendance, you will no longer be eligible for Pell, regardless of your financial need. Additionally, students with Student Aid Index (SAI) at or above $14,790 are no longer eligible.  

What do NEA members planning on Public Service Loan Forgiveness need to know? 

Early in his second term, President Trump issued an executive order, enabling the Department of Education to exclude employers from the Public Service Loan Forgiveness program if they engage in activities deemed objectionable by the administration—such as helping immigrant students or maintaining policies and practices that promote diversity, equity, inclusion and accessibility (DEIA).  

These types of activities—which could include Black History Month celebrations or support for Gay Straight Alliances—are common among many school districts, as well as colleges and universities. Consequently, the Department could have relied on this rule to disqualify school districts and higher education institutions, and by extension countless teachers, faculty, and staff across the nation.  

NEA immediately joined a lawsuit, suing the Trump administration, alleging this rule violated federal law. On June 30, NEA and its partners won. In his 68-page ruling, U.S. District Judge Myong Joun made clear that the Trump administration’s attempts to politicize Public Service Loan Forgiveness were unlawful and violated the First Amendment by tying eligibility to the administration’s politics. “The Department…cannot force PSLF beneficiaries to adopt their policy views,” Joun wrote.