How Trump's big spending bill will overhaul repayment for millions of student-loan borrowers
Congress passed President Donald Trump's "big beautiful bill" — a major spending package — on July 3, meaning a slew of proposals to change the way student-loan borrowers take out and pay off their debt is becoming law.
The bill eliminates existing income-driven repayment plans and replaces them with two less generous options, along with adding new restrictions on the types of loans parents and graduate students can take out. It also limits borrowers' abilities to place their loans on deferment if they're facing financial hardship.
Linda McMahon, Trump's education secretary, lauded the bill's passage in a post on X, saying that it "simplifies the overly complex student loan repayment system" and "reduces federal student loan borrowing amounts to help curb rising tuition costs."
"A truly beautiful bill for the American people," she said.
Borrower advocates and Democratic lawmakers said the bill will hurt Americans repaying their student loans. Sen. Elizabeth Warren said in a statement that student-loan payments will go up as a result of the legislation, and Natalia Abrams, president of the advocacy group Student Debt Crisis Center, said that "this dangerous bill abandons millions of borrowers, leaving them with few, often inaccessible repayment options and deepening their financial insecurity.
Here's how the bill will impact millions of federal student-loan borrowers.
A student-loan repayment overhaul
New student-loan borrowers will face fewer available repayment options as a result of the spending bill. The bill will eliminate existing income-driven repayment plans and replace them with two repayment options.
The first option is called the Repayment Assistance Plan. It would set borrowers' payments at 1-10% of their income, depending on their income levels, with a minimum monthly payment of $10. Unpaid interest is waived under this plan, and any remaining balance will be forgiven after 30 years.
It's less generous than former President Joe Biden's SAVE plan, which the bill eliminates. SAVE would have allowed borrowers with original balances of $12,000 or less to receive loan forgiveness after 10 years of payments, and it reduced payments on undergraduate loans from 10% to 5% of a borrower's discretionary income.
The SAVE plan is blocked in court pending a final legal decision, and with the bill's passage, the 8 million borrowers enrolled in SAVE have between July 2026 and July 2028 to enroll in a new plan.
The second option is a new standard repayment plan, which sets fixed payments for 10-25 years based on the borrowers' original balance. While existing standard plans typically have a fixed repayment period, this new plan's repayment period would vary based on the original amount borrowed.
Along with fewer repayment plans, the bill eliminates borrowers' ability to defer their student-loan payments in the event of economic hardship and unemployment, leaving standard forbearance as the only option to delay payments.
It also eliminates the graduate PLUS program, which allowed borrowers at graduate and professional schools to borrow up to the full cost of attendance for their education. The bill retains the parent PLUS program, which allows parents to take on student loans for their kids' educations, but places a $65,000 lifetime cap.
In addition to repayment changes, the bill takes on college accountability: It ensures that programs in which graduates don't earn more than the median high school graduate in their state will lose federal student-loan eligibility. The legislation also extends the Pell Grant to shorter-term programs, which McMahon has previously pushed for.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Newsweek
32 minutes ago
- Newsweek
F1 Owner Expands Motorsport Empire with MotoGP Takeover
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. The owner of Formula One, Liberty Media Corporation, confirmed on July 3 that it has completed the purchase of MotoGP rights holder Dorna Sports. Apart from F1, Quint, and other minority investments, the American organization now lists MotoGP as a subsidiary. Liberty Media, a renowned player in the sports, media, and entertainment sector, acquired 84 percent of Dorna. The remaining 16 percent is held by the MotoGP management. The news arrives days after Newsweek Sports reported that Liberty Media was granted unconditional approval for the acquisition of Dorna for a reported $4.4 billion. Confirming the transaction, MotoGP stated: Team Ducati Lenovo Team's Marc Marquez (R) leads the race at the start of the MotoGP Aragon Grand Prix at the Motorland circuit in Alcaniz, northeastern Spain, on June 8, 2025. Team Ducati Lenovo Team's Marc Marquez (R) leads the race at the start of the MotoGP Aragon Grand Prix at the Motorland circuit in Alcaniz, northeastern Spain, on June 8, 2025. JOSE JORDAN / AFP/Getty Images "Liberty Media Corporation ("Liberty Media") (Nasdaq: FWONA, FWONK, LLYVA, LLYVK) and Dorna Sports, S.L. ("Dorna"), the exclusive commercial rights holder of the MotoGP™ World Championship ("MotoGP"), announced today that Liberty Media has completed its acquisition of Dorna. "Following transaction close, Liberty Media's Formula One Group is composed of its subsidiaries Formula 1, MotoGP, and Quint, and other minority investments." The takeover of MotoGP was supposed to conclude last year, but given the high-profile nature of the acquisition, the deal was under the European Union's lens, which carried out an investigation to understand the deal's impact on broadcasters and streaming platforms, especially given that two motorsport giants, F1 and MotoGP, would belong to a common owner. Following the European Union's approval, Carmelo Ezpeleta, CEO of Dorna, who will continue to manage MotoGP, said in a statement: "We are very happy that the European Commission has approved the transaction. This is an important milestone confirming the even brighter future that lies ahead for MotoGP. "MotoGP is one of the most thrilling sports on Earth, and we look forward to accelerating the sport's growth and expanding its reach to even more fans around the world. Liberty is the best possible partner for our sport and the entire MotoGP community, and we are excited to create even greater value for our fans, commercial partners and everyone competing." Liberty Media President and CEO, Derek Chang said: "Today's approval from the European Commission marks the final condition to closing Liberty's acquisition of MotoGP. We are thrilled to officially commence Liberty's partnership with Carmelo and his excellent management team. "MotoGP is a highly attractive premium sports asset with incredible racing, a passionate fanbase and a strong cash flow profile. We believe the sport and brand have significant growth potential, which we will look to realize through deepening the connection with the core fan base and expanding to a wider global audience." Considering the success F1 has witnessed since its acquisition by Liberty Media in 2017, and its expansion into new markets such as America, one could expect MotoGP to grow in a similar manner.
Yahoo
34 minutes ago
- Yahoo
2 American Companies to Buy and Never Sell
President Donald Trump's policy is an opportunity to add American companies to your portfolio. Buying and holding stocks of American powerhouses now, like these two, should pay off in the long term. 10 stocks we like better than Caterpillar › President Donald Trump's "America First" policy has put American companies back in the spotlight. Trump wants to prioritize national interests, with a focus on boosting domestic manufacturing and protecting key industries from unfair trade practices and foreign competition, among other things. Trump's tariffs and trade actions, therefore, are a key part of the America First strategy, the potential mid- and long-term implications of which have renewed investor interest in American companies like these two, both of which have been around for 100 years now. Buying these stocks now and holding them for the long term could prove hugely rewarding for shareholders. NextEra Energy (NYSE: NEE) calls itself "America's energy company," and rightfully so -- it owns America's largest electric utility, Florida Power & Light Company (FPL), with over 6 million customer accounts. While natural gas currently accounts for over 40% of total electricity generated in the U.S., the International Energy Agency (IEA) projects the share of renewables to rise rapidly in the coming years. NextEra Energy is perfectly poised to take advantage of the trend, as it is also the world's producer of wind and solar energy and one of the most diversified energy providers in America. NextEra Energy generates over 50% of electricity from renewables, 36% from natural gas, and 8% from nuclear energy. It's an incredibly powerful business mix, one that combines the stability of a utility with growth from renewables. That explains why NextEra Energy stock has generated solid returns for investors over the years despite essentially being a boring utility stock. NextEra Energy is growing rapidly. It already has a renewables and energy storage backlog of over 27 gigawatts (GW) and believes it could develop up to 46.5 GW of new capacity through 2027. For perspective, NextEra Energy currently has around 38 GW of renewables and storage. Between FPL and renewables, NextEra Energy plans to invest nearly $120 billion on its energy infrastructure over the next four years. All that spending should boost the company's cash flows and dividends, with management already aiming for a 10% annual dividend growth through at least 2026. NextEra Energy has paid dividends since 1991 and increased it for over 20 years now, making it one of the most incredible stocks for dividend and growth investors alike to buy now and hold. Caterpillar (NYSE: CAT) is one of the most iconic American brands, recognized globally for its signature yellow machinery and logo. It started as a tractor company in 1925. Today, Caterpillar is the world's largest manufacturer of construction and mining equipment, aside from off-highway diesel and natural gas engines and turbines. However, that also makes Caterpillar a cyclical stock, with tariffs adding an element of uncertainty now. Yet Caterpillar is among the few American companies you can buy and never sell. This is much like the strategy of legendary investor Warren Buffett, who believes in buying great businesses, not just stocks, and holding the shares for practically "forever." Despite the cyclicality of its businesses, Caterpillar stock has outperformed the S&P 500 (SNPINDEX: ^GSPC) by huge margins over the years, especially with reinvested dividends. Caterpillar is also a powerful dividend stock, having increased its dividend for 31 consecutive years. If you'd bought Caterpillar stock 10 years ago and reinvested those dividends, you'd have made more than 500% in total returns. Caterpillar's leadership position in the industry, massive size and scale of business, extensive dealership network, and management's prudent capital allocation have been the keys to its success over the years. To put some numbers to that, Caterpillar has dealers across 190 countries, and it generated nearly $65 billion in sales in 2024. Since 2019, Caterpillar has returned almost $40 billion of free cash flows from its core machinery, energy, and transportation businesses to shareholders in the form of dividends and share buybacks. Caterpillar also runs a financing business for its dealers and customers. Caterpillar has navigated many a storm and remains largely undeterred amid the tariff uncertainty, since it serves diverse end markets, has its largest manufacturing base in the U.S., and is a net exporter of goods. With its order backlog increasing by a record $5 billion in the first quarter, Caterpillar is among the few American stocks you'd want to buy now and never sell. Before you buy stock in Caterpillar, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Caterpillar wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $692,914!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $963,866!* Now, it's worth noting Stock Advisor's total average return is 1,049% — a market-crushing outperformance compared to 179% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 30, 2025 Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends NextEra Energy. The Motley Fool has a disclosure policy. 2 American Companies to Buy and Never Sell was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
34 minutes ago
- Yahoo
Investors eye tariff deadline as US stocks rally
By Saqib Iqbal Ahmed NEW YORK (Reuters) -Investors will be keeping a close eye on tariff headlines out of Washington next week, as a temporary suspension of punitive import levies is set to expire. If that Wednesday deadline passes without an increase in trade tensions, it could prove positive for the markets. Negotiators from more than a dozen major U.S. trading partners are rushing to reach agreements with U.S. President Donald Trump's administration by July 9 to avoid even higher tariffs, and Trump and his team have kept up the pressure in recent days. On Wednesday, Trump announced a deal with Vietnam that he says will impose a lower-than-promised 20% tariff on many Vietnamese exports. While the administration has teased a forthcoming deal with India, talks with Japan, the sixth-largest U.S. trading partner and closest ally in Asia, appeared to hit roadblocks. Investors have shifted from panicking about tariffs to relief buying, recently lifting the U.S. stock market back to record highs, with corporate earnings and the U.S. economy holding up better than many had expected through a period of dramatic policy change. The S&P 500 has risen about 26% from April 8, when stocks bottomed following Trump's draconian April 2 tariff announcement. But much of the rally has been driven by retail market participants and corporate share buybacks, even as institutional investors have been more reticent. Despite the S&P 500 making new highs, equity positioning is far below February levels as investors remain underweight stocks, according to Deutsche Bank estimates. "This has definitely been a junkier rally, a more speculative rally," Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management. "In the last week or so, it's been driven a lot more, I think, by retail than it has been by institutions. Institutional positioning is really just average," she said. While many factors are keeping investors cautious, including worries about U.S. economic growth and lofty stock market valuations, getting past the tariff deadline without a major escalation in tensions would be one less thing to worry about in the near term, analysts said. "I think that there may be some threats and saber-rattling, but I don't really think that any of that now poses a major danger to the market," said Irene Tunkel, chief U.S. equities strategist, BCA Research. Still, investors don't expect the tariff deadline to put an end to trade tensions for good. "I don't view it necessarily as a hard deadline," said Julian McManus, portfolio manager at Janus Henderson Investors. "The 90-day pause itself was instituted because the markets were falling apart, and I think policymakers needed breathing room and time to try and negotiate these deals or find some kind of off ramp," he said. Investors' cautious approach to boosting equity exposure now is reminiscent of their behavior immediately after the pandemic market drop of March 2020, when allocations to stocks recovered more slowly than major market indexes, Deutsche Bank strategist Parag Thatte, said. "It does mean that there is room for exposures to keep rising, which is a positive for equities all else equal," Thatte said. After a roller-coaster first half, the S&P 500 is entering a historically strong period. Over the past 20 years, July has been the strongest month for the benchmark index with an average return of 2.5%, according to a Reuters analysis of LSEG data. Investors will also be keeping an eye on economic data - especially inflation numbers - and second quarter results in coming weeks for clues to the health of the U.S. economy, and the Federal Reserve interest rate outlook. "We're right at the point where institutions are going to have to decide one way or the other, do they believe the rally or not," Morgan Stanley's Shalett said. Wall St Week Ahead runs every Friday. For the daily stock market report, please click [.N] Sign in to access your portfolio
