2025 has been a tumultuous year for federal student loan borrowers. NPR breaks down the most important changes borrowers should understand as they head into 2026.
SCOTT DETROW, Host:
Student loan borrowers spent most of 2025 trying to keep up with massive changes to the federal student loan system. This includes changes to repayment plans and credit limits. NPR’s Cory Turner has this update on where we’ve been and where we’re headed.
By CORY TURNER, BY: Even student loan experts found the past year a little dizzying.
PERSIS YU: We’ll see. Where to start (laughs)?
TURNER: Persis Yu, with the liberal advocacy group Protect Borrowers, suggests starting with the latest news, the death of President Biden on the Valued Education Savings, or SAVE, plan.
YU: SAVE was the most affordable, generous and flexible plan for millions of student loan borrowers.
TURNER: But it was so affordable and generous and flexible that the Republicans were proposing. The courts froze SAVE. And this month, the Trump administration reached a proposed deal to officially shut it down.
BETSY MAYOTTE: People who were making other financial decisions based on what they thought their payment would be in a SAVE plan are in trouble.
TURNER: Betsy Mayotte is the founder of The Institute of Student Loan Advisors, and she says the roughly 7 million borrowers still in SAVE have been on a rollercoaster.
MAYOTTE: In the history of student loans, the payment plan has never been challenged in court and existing borrowers have never pulled out.
TURNER: Mayotte says those SAVE borrowers will have to change plans and find a way to afford higher monthly payments. But even changing plans is about being weird. SAVE isn’t the only one leaving. And starting in July, new borrowers will only have two plans to choose from. The changes next year aren’t just around repayment. Until now, graduate students could essentially borrow as much money as they needed.
PRESTON COOPER: Colleges could simply raise the price, pass the cost on to students, and the federal government would have to write a check through the federal student loan program.
TURNER: Preston Cooper studies student loan policy at the conservative American Enterprise Institute. He says Republican lawmakers were tired of this kind of blank check economy and passed tough new limits on college borrowing.
COOPER: I think that system was completely unsustainable, and I understand very well why Congress decided to end it.
TURNER: Cooper says ideally these caps will force some schools to lower prices. Until they do, Persis Yu with Protect Borrowers says many students will face a serious funding gap between their federal loans and the actual cost of graduate school.
YU: Students will have to replace this gap with some other type of funding. And many students will have to turn to the private student loan market.
TURNER: Which brings us to one thing that Yu, Mayotte and Cooper pretty much agree on.
YU: Right now, we’re basically at the precipice of the starting cliff.
MAYOTTE: I really think we’re heading toward historic default rates.
COOPER: We currently have about 12 million borrowers who are either delinquent or in default on their loans.
TURNER: That’s more than 1 in 4 borrowers. And so, heading into 2026, a big question hangs over the Trump administration and the Republicans. Can all these changes they have made help bring these borrowers back to good standing? Or will all those initial snowballs become an avalanche?
Cory Turner, NPR News.
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