Latest on Student Loans: Moves to Consider
August 24, 2025
The student loan landscape is changing, and if you’re a borrower, you may see significant updates to your repayment plan soon.
What’s happening now?
● Interest Resumes for SAVE Plan Borrowers: As of August 1, interest has started accruing again for nearly 8 million borrowers enrolled in the Saving on a Valuable Education (SAVE) plan. Other repayment plans are not affected by this change.
● Repayment Program Overhaul: Under the new federal tax and spending legislation, the U.S. Department of Education is phasing out some existing repayment options and introducing a new income-driven repayment plan called the Repayment Assistance Plan (RAP), launching July 1, 2026. Borrowers currently on plans being discontinued—including SAVE—must choose a new plan by July 1, 2028, or they will be automatically moved into RAP.
● Potential Wage and Benefit Garnishment: Borrowers in default could face wage garnishment of up to 15% of disposable income starting in fall 2025. Tax refunds and even Social Security benefits may also be at risk.
To stay ahead of these changes, check in with your loan servicer to confirm what you owe and explore your repayment options. In the meantime, here are key steps you can take to manage your student loans effectively:
1. Explore Career-Based Repayment and Forgiveness Programs
Your career path may unlock special repayment or forgiveness opportunities. For instance:
● Public Service Loan Forgiveness (PSLF): Available to employees of government agencies and qualifying nonprofits.
● Federal Student Loan Repayment Program: For eligible federal employees.
● Teacher Loan Forgiveness: For educators in low-income schools or educational service agencies.
● DOJ Attorney Student Loan Repayment Program: For attorneys committing to three years of service with the Department of Justice.
● Veterinary Medicine Loan Repayment: For veterinarians serving in designated shortage areas.
● National Health Service Corps Loan Repayment: For eligible healthcare professionals.
Even if your profession isn’t listed, smaller programs may exist within your industry, and some employers now offer student debt repayment benefits—check with your HR department.
2. Strengthen Your Budget
With interest resuming and payments restarting, budgeting becomes critical. Borrowers on SAVE may see an average increase of up to $300 per month, according to the Student Borrower Protection Center.
To prepare:
● Use a budgeting tool or spreadsheet to track income (after taxes and retirement contributions) and monthly expenses.
● Identify areas to cut costs—such as groceries, utilities, rent, or transportation—to make room for your loan payments.
● Consider automating payments to stay on track and potentially lower your interest rate.
3. Be Strategic About Debt Repayment
If you have multiple loans or types of debt, consider:
● Snowball vs. Avalanche Methods: Decide whether to pay off smaller balances first (snowball) or tackle higher-interest debt first (avalanche).
● Exploring creative repayment strategies that fit your situation.
● Balancing debt repayment with other financial priorities, like investing for retirement.
4. Protect Your Credit
Student loans directly impact your credit score. Missed payments can lead to lower scores, higher borrowing costs, and even default—which is more damaging than a late payment.
If you’re struggling to pay:
● Request deferment or forbearance: Temporary options that can pause or reduce payments.
● Stay informed about new rules: Starting July 1, 2027, economic hardship and unemployment deferments will no longer be available for newly disbursed federal loans.
Staying informed and proactive can help you navigate these changes with confidence—and keep your financial future on track.
Sources:
https://www.fidelity.com/learning-center/smart-money/how-to-pay-off-student-loan
Disclosure:
This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.
This material is provided as a courtesy and for educational purposes only.
These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.