Colorado students react to student loan changes on July 1. What borrowers need to know.
Expect major changes to student loans starting July 1, limiting how much Americans can borrow and their repayment options. It's all part of the One Big Beautiful Bill Act, which President Trump signed into law last year. The U.S. Department of Education has framed the overhaul as a way to streamline the student loan system, which currently consists of seven repayment plans, and rein in student loan debt. It stands at almost $1.9 trillion, according to LendingTree.
MSU Denver mechanical engineering student Ismael Atayde is among those who will navigate these changes. "I rely a lot on financial aid to help me through," he said.
Financial aid is part of his everyday life. Not only does he work at the MSU Denver Office of Financial Aid, but he also relies on those funds to make ends meet, "Financial aid helps me pay for my tuition. It also helps with other costs outside of school. transportation, housing, food, things like that."
New rules introduced will impose stricter limits on how much students can borrow to finance their studies. "They can expect fewer loan options in terms of federal loans," said Jennifer Helgeson, MSU Denver Office of Financial Aid and Scholarships Director of Compliance.
That new cap will impact graduate students and those pursuing professional degrees. "There will no longer be the PLUS loan available for grad students. That has always been a supplemental loan for graduate students to help pay for other educational costs that other financial aid would not cover," she said.
Current Grad PLUS borrowers will be grandfathered and will still be able to access the loans, according to EdSource.
There are also changes coming to Parent PLUS loans. "That's a loan a parent can take out on behalf of their student. Those are not going away, but there's going to be limits on how much the parent can borrow per student. That will be limited to $20,000 per year or $65,000 over the lifetime of the undergrad program for that student."
In addition, SAVE borrowers face a separate transition in July 2028. But borrowers enrolled in SAVE will need to choose a new repayment plan before then. Loan servicers are expected to begin notifying SAVE borrowers on or around July 1 that they must select a new repayment option within 90 days.
The new tax law also tightens eligibility requirements for the Pell Grant program, the largest federal aid program for low-income students. Students who receive non-federal grants or scholarships up to or exceeding the cost of their attendance will no longer be eligible for additional funding through the Pell Grant program.
Hegelson says there are ways to still receive funding for your education, however. "Come and talk to their financial aid office and see what alternatives specific colleges have for different programs. There are also private alternative loans to look into if they really need that funding."
