UK Student Loan Payments: The landscape of federal student loan repayment has undergone dramatic changes throughout 2025, with critical updates taking effect this September that every graduate needs to understand. These modifications affect millions of borrowers across the United States, fundamentally altering how student loans are repaid and managed.
SAVE Plan Ends With Interest Resuming in August
The most immediate change affecting borrowers involves the Saving on a Valuable Education (SAVE) Plan, which was blocked by federal courts and deemed unlawful. Starting August 1, 2025, interest began accruing again for the nearly 7.7 million borrowers enrolled in SAVE, who had previously enjoyed zero percent interest rates.
This development means borrowers who remained in SAVE will see their loan balances grow as interest accumulates. The Department of Education has begun direct outreach to affected borrowers, providing instructions on transitioning to legally compliant repayment plans.
New Borrowing Limits Take Effect
Federal student loan borrowing limits have been significantly reduced under the recent legislative changes. Graduate students now face a $100,000 lifetime cap, while those pursuing professional degrees like law or medicine can borrow up to $200,000. Parent PLUS loans are capped at $65,000 per child.
These caps represent a substantial reduction from previous limits and will particularly impact graduate and professional school students who traditionally relied on higher borrowing amounts to finance their education.
Income-Driven Repayment Plans Face Major Overhaul
Current Borrowers: Limited Time Remaining
Borrowers currently in Income-Contingent Repayment (ICR), Pay as You Earn (PAYE), or SAVE plans must transition to new repayment options by July 1, 2028. The Income-Based Repayment (IBR) plan has become the primary alternative for most borrowers seeking income-driven options.
Importantly, the requirement for borrowers to demonstrate partial financial hardship to qualify for IBR has been eliminated, making this plan accessible to more borrowers than before.
Future Borrowers: Simplified but Limited Options
New borrowers taking loans after July 1, 2026, will have only two repayment options: a standard fixed payment plan and a new Repayment Assistance Plan (RAP). This represents a dramatic simplification from the current seven available repayment plans.
The New Repayment Assistance Plan (RAP)
The RAP introduces a fundamentally different approach to income-driven repayment. Unlike previous income-based plans that protected income up to certain poverty thresholds, RAP bases payments on gross income rather than discretionary income, requiring payments even from borrowers earning below the federal poverty level.
This change could result in higher monthly payments for many borrowers, particularly those with lower incomes who previously benefited from income protection features in other plans.
Forgiveness Programs Under Review
The Public Service Loan Forgiveness (PSLF) program continues operating but faces potential scope reductions. The Education Department has proposed new regulations that would limit PSLF-qualified employers, potentially excluding organizations deemed to undermine national security or American values.
Additionally, several existing income-driven plans no longer conclude with loan forgiveness, including the Income-Contingent Repayment and Pay as You Earn plans.
What Graduates Should Do Now
Given these significant changes, current and prospective borrowers should take immediate action to protect their interests. First, ensure all contact information is updated with loan servicers and on StudentAid.gov to receive important notifications about changing requirements.
For borrowers currently in SAVE, transitioning to IBR may provide the most favorable terms available. Use the Federal Student Aid Loan Simulator tool to compare payment options and determine the best strategy for your financial situation.
Stay informed about ongoing changes, as most new provisions won’t take full effect until July 2026 or later, but the Department will likely begin implementing rule changes throughout the next year.
Looking Ahead
These changes represent the most significant restructuring of federal student loan repayment in decades. While the modifications aim to simplify the system and improve fiscal responsibility, they also create new challenges for borrowers, particularly those with lower incomes who previously benefited from more generous income protection features.
Understanding these changes and planning accordingly will be crucial for managing student loan obligations effectively in this new landscape. Stay connected with your loan servicer and regularly check official Department of Education communications for the latest updates affecting your specific situation.
