# Big Changes Coming to Student Loans on July 1
The federal government will roll out major student loan reforms beginning July 1, reshaping repayment options and forgiveness pathways for millions of borrowers.
The changes stem from the Biden administration's ongoing efforts to restructure federal student aid after the Supreme Court blocked the president's broader loan cancellation plan in 2023. These modifications expand income-driven repayment plans and accelerate timelines for loan forgiveness in specific circumstances.
One key change involves the SAVE plan, an income-driven repayment option that calculates monthly payments based on borrower earnings. Under the new rules, borrowers earning less than 150 percent of the federal poverty line will pay nothing monthly while their loans accrue no interest. This protects lower-income borrowers from debt growth despite making no payments.
The reforms also modify forgiveness timelines for borrowers in Public Service Loan Forgiveness (PSLF) programs. Teachers, social workers, and other public sector employees will see faster credit toward the 120-payment requirement needed for forgiveness. Partial public service employment now counts toward the threshold more favorably than before.
Undergraduate borrowers will benefit from adjusted interest calculation methods that prevent unpaid interest from ballooning their principal balances. The changes address a longstanding complaint that monthly payments sometimes cover only accrued interest, leaving principal untouched and extending repayment indefinitely.
Graduate student borrowers face separate adjustments to how their loans are treated under income-driven plans, with enhanced pathways toward forgiveness after 25 years of payments rather than previous longer timelines.
Federal student loan servicers have spent months preparing systems to implement these changes. Borrowers should expect transition periods as the government migrates accounts to new repayment structures. The Department of Education encourages borrowers to review their options on StudentAid