One year after President Donald Trump signed his core domestic policy package into law, student loan borrowers are bracing for a major overhaul of the federal lending system that will begin this week.Limited time: Save 25% on NBC News subscriptionGet exclusive reporting, live Q&As and ad-free reading.Many were already struggling when the Biden administration attempted to enact sweeping student debt relief in the wake of the Covid pandemic, but the proposal encountered Republican blowback.Now, under the Trump administration’s changes, borrowers will experience a range of effects with some seeing little difference in what they owe each month while many lower-income borrowers will be hit the hardest with increases, student advocacy groups and financial planners say.Come Wednesday, Trump’s “big, beautiful bill” will streamline the system to have fewer loan repayment program options and greater restrictions on how much students can borrow.
And it will end the most borrower-friendly repayment program launched under President Joe Biden, forcing many of the more than 7 million people enrolled to pay more in their monthly federal loan bills.Separately, interest rates will also increase.“There is a real sense of urgency and almost fear around what’s to come,” said Becca Craig, a wealth adviser with Focus Partners Wealth in Kansas City, Missouri, who has seen an uptick in borrowers seeking help before the latest changes take effect.The new direction is part of the Trump administration’s broader goal of slashing funding from government assistance programs across federal agencies.
As part of the plan, the federal student aid program will be transferred from the Education Department to the Treasury Department, which administration officials say is better equipped to get debtors into compliance because it collects defaulted debt for federal and state agencies.The White House has accused the Biden administration of focusing too heavily on student loan forgive...