This year is shaping up to be a defining year for student loan reform, with significant developments in student loan legislation. Between high-profile court actions and sweeping reconciliation proposals, borrowers face potential changes that could reshape repayment, loan forgiveness, and borrowing limits.
We’ll walk through the biggest actions on the table—from IDR court actions to the One Big Beautiful Bill Act—and show how the proposed changes could affect you. We’ll also share practical steps to stay informed and what to watch as the process unfolds.
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Where student loan legislation stands today
The federal student loan landscape has been changing almost constantly since 2020. In response to the COVID-19 pandemic, the government paused student loan payments for several years. The pause ended for most borrowers in late 2023, but executive and legislative changes are still underway.
Executive orders direct agencies on how to enforce or interpret existing statutes, often through temporary measures or administrative adjustments. Conversely, legislative changes establish or change statutory law and must be approved by both chambers of Congress and the president before taking effect.
One of the most notable recent changes is that the U.S. Department of Education resumed its efforts to collect defaulted student loans in early May 2025. Borrowers in default can expect to start receiving collection notifications and even wage garnishments.
Student loan legislation terms to know
- IDR (Income-driven repayment): A plan that sets your monthly loan payment based on your income and family size, often lowering payments for those with lower earnings.
- PSLF (Public Service Loan Forgiveness): A program that forgives the remaining balance on your federal Direct Loans after making 120 qualifying payments on your federal student loans while working full-time for a qualifying public service employer.
- Treasury Offset Program: A federal process that collects defaulted federal debt by withholding tax refunds or other federal payments and applying them to your outstanding balance.
- Loan rehabilitation: A way to get your defaulted federal loan back into good standing by making a consecutive series of agreed-upon payments on time.
- Forbearance: A temporary pause or reduction in loan payments you can request when you’re facing financial hardship or specific circumstances.
- Delinquency: The status of your loan when you miss a payment; loans become delinquent the day after a missed due date and can lead to default if not resolved.
- Default: The status of your loan when your payments are 270 days past due (about nine months) or when you meet other legal default criteria, resulting in serious credit and collection consequences.
Student loan legislation to watch
As Congress and the courts tackle student loan reform in 2025, several legal challenges and proposed bills could meaningfully change repayment rules, eligibility, and forgiveness programs.
Below are some of the top actions to watch. These include IDR court actions and major budget reconciliation legislation.
1. IDR court actions
Who it affects
- Borrowers who applied or planned to apply for an IDR plan using Saving on a Valuable Education (SAVE) Plan provisions: New online applications are paused due to the court’s injunction.
- Existing SAVE enrollees: These borrowers are placed in SAVE forbearance. Payments are optional, but billing and SAVE-related calculations are paused.
- PSLF applicants: Payments made during SAVE forbearance won’t count toward PSLF unless borrowers switch to another IDR plan.
- Borrowers with past forbearance or deferment periods: Some may be eligible to make “buy back” payments to count those months toward PSLF credit.
What it is
In February 2025, the U.S. Court of Appeals for the 8th Circuit issued a nationwide injunction blocking the implementation of the Biden administration’s SAVE Plan, as well as certain provisions of other IDR plans.
This ruling temporarily halted online IDR applications because they incorporated sections of SAVE subject to the court’s injunction.
Current status
2. One Big Beautiful Bill Act of 2025
Who it affects
This act could affect nearly every federal student loan borrower and most postsecondary institutions. Borrowers across income levels and degree programs may see changes in eligibility, repayment options, and loan limits.
Colleges and universities would also face new accountability and reporting requirements.
What it is
The One Big Beautiful Bill Act (H.R. 1) overhauls federal student loan programs by phasing out certain loan types, capping borrowing limits, and consolidating repayment plans under a unified structure.
It seeks to streamline repayment options, restrict new borrowing for Subsidized and PLUS Loans, and revise deferment, forbearance, and forgiveness rules. This legislation also allocates funding to support loan servicers in updating systems and processing borrower requests.
If enacted, some of the act’s key provisions would:
- End Subsidized Loans for undergraduates and Direct PLUS loans for graduates. As of July 1, 2026, undergraduates can’t get Subsidized Loans, and Direct PLUS loans won’t be available to graduate or professional students. This won’t apply to already enrolled students for three academic years.
- Restrict Parent PLUS loans. These loans will only be available if dependent students have already received the maximum Unsubsidized Loan amount.
- Set new aggregate loan limits. The aggregate amount any individual borrower can get across all student loan types will be $200,000, excluding Direct PLUS and Parent PLUS loans.
- Limit available repayment options. For student loans made after July 1, 2026, two repayment plans will be available: a standard repayment plan and a new income-based repayment plan, the Repayment Assistance Plan.
- Reduce loan rehabilitation opportunities. Borrowers who have defaulted will only be able to rehabilitate their loans two times. Plus, beginning July 1, 2025, they must pay at least $10 monthly on their loan.
- Eliminate hardship and deferment options. After July 1, 2025, economic hardship and unemployment deferments will disappear. Plus, the amount of time a borrower can be in forbearance will be reduced for most borrowers.
- Revise the PLSF program. Payments under the new Repayment Assistance Plan will be considered qualifying payments. Public service jobs won’t include dental internships or residencies starting June 30, 2025, for borrowers without Direct PLUS or Unsubsidized Loans.
- Change Pell Grant eligibility. Foreign income will be included, and students with a Student Aid Index at or above the maximum Pell Grant aren’t eligible, even if income criteria are met. Only students enrolled at least half-time can qualify, and credits to be considered full-time are increased.
The proposed $200,000 aggregate loan limit in the One Big Beautiful Bill Act marks a notable shift from current federal borrowing caps. Today, undergraduate students can borrow a total of $31,000 to $57,500 depending on dependency status, while graduate and professional students are limited to $138,500, including undergraduate loans.
At face value, the new $200,000 limit appears more generous. However, the proposal also eliminates Subsidized Loans for undergraduates and Direct PLUS Loans for graduate students, which could offset the perceived benefit. Combined with stricter eligibility rules and fewer repayment plan options, the new cap may not offer the same level of support for all borrowers.
In addition to the outlined changes, the act would increase Pell Grant funding for fiscal years 2026 through 2028. Plus, starting July 1, 2026, Pell Grants would be available to students enrolled in eligible workforce programs.
Eligible workforce programs must provide instruction for at least eight weeks and no more than 15 weeks. Plus, they must provide clock (instruction) hours of at least 150 hours and no more than 600 hours.
Current status
H.R. 1 passed the House on May 22, 2025, and is pending Senate consideration under budget reconciliation. If the Senate approves it and the president signs it, its provisions will take effect according to the timelines specified in the bill.
How 2025 student loan legislation could affect you
As 2025 reforms advance, the effects on borrowers vary. With the proposed law and pending IDR actions, borrowers may lose access to certain loan types, face new repayment rules, or encounter changes in forgiveness programs.
Here’s how the proposals and court actions could affect different borrowers:
Undergraduate borrowers
- No new Subsidized Loans will be available after July 1, 2026, which means future undergrads will need to rely on Unsubsidized Loans or private financing.
- Lifetime borrowing caps could limit how much aid they can receive.
Graduate and professional borrowers
- Graduate and professional students lose Direct PLUS eligibility, requiring increased reliance on Unsubsidized Loans or private funds.
- They also must choose between a standard repayment plan or the new Repayment Assistance Plan, reducing repayment flexibility.
Parent PLUS borrowers
- Parents could borrow Parent PLUS only after dependents exhaust Unsubsidized Loan limits.
- Tighter Parent PLUS rules might force some families to find alternative funding or cover out-of-pocket costs, affecting parent cosigners.
Borrowers in default
- Borrowers in default face resumed collections—wage garnishments and offset of federal payments began again in May 2025.
- Under the proposed legislation, they’ll have up to two rehabilitation chances but must make minimum monthly payments of $10.
Public service professionals
- Public service professionals will benefit because payments they make under the new Repayment Assistance Plan count toward Public Service Loan Forgiveness.
- However, time served in medical or dental residency may not qualify for PSLF if PLUS or Unsubsidized Stafford Loans weren’t taken by June 30, 2025.
Borrowers facing a hardship or unemployment
- Economic hardship and unemployment deferments end July 1, 2025, with forbearance limited.
- Borrowers must plan for resumed payments or transition into an income-based plan.
Borrowers with stable income or high-interest loans
If you’re not affected by loan type changes or forbearance limits, but you’re still paying off federal or private student loans, refinancing may be a strategic option.
Refinancing can help lower your interest rate or adjust your term to better fit your financial goals, especially if your credit and income have improved since you borrowed. Keep in mind that refinancing federal loans means giving up federal protections, like IDR and PSLF.
Credible makes it easy to compare rates from multiple lenders at once.
What’s likely vs. unlikely to pass this year
The fate of 2025’s proposal and pending IDR changes depends on two concrete steps:
- Senate approval of the reconciliation package
- A final court decision on the SAVE injunction
Until both occur, major overhauls remain on hold.
Senate approval of H.R. 1
H.R. 1 must win a Senate majority under reconciliation rules. Floor consideration is expected before July 4, 2025, but timing and amendments could shift the package or stall it entirely.
Resolution of the IDR injunction
The nationwide injunction blocking SAVE features will stay in place until a higher court rules. The Department of Education has adjusted its portal, yet full restoration of SAVE components hinges on that final decision.
How to stay informed and take action
Staying ahead of student loan changes can help you avoid surprises and make the most of new opportunities. Regularly checking official sources and engaging directly ensures you’ll be ready for updates and can voice your needs.
Here are practical steps you can take today:
- Check your servicer and loan type: Log in to your loan servicer portal. Confirm which loans you hold (e.g., Direct, PLUS, FFEL), and review your current repayment plan. Knowing your exact loan mix helps you spot relevant policy updates.
- Watch for official updates: Monitor the Department of Education News page and FSA social channels for rulings, regulatory changes, and program deadlines. Bookmark pages so you can revisit them quickly.
- Join mailing lists or follow agencies: Subscribe to email alerts from Federal Student Aid and your loan servicer for real-time headlines. You can also subscribe to updates from reputable news outlets or professional associations.
- Submit public comments or contact lawmakers: When proposed regulations open for public comment, submit your perspective through Regulations.gov. Reach out to your representatives in Congress to share how policies affect you. Personal stories can influence debate.
These simple steps will help you spot changes as soon as they happen. You can then make your voice heard if you have questions or concerns.
Future student loan legislation: What to keep in mind
The 2025 student proposals and court actions hint at major shifts, yet until reconciliation clears the Senate and the SAVE injunction is resolved, most changes remain in flux. Monitor important dates and procedural updates rather than assuming final outcomes.
Track your loans, subscribe to servicer alerts, watch for official public announcements, and submit comments when regulations are open for feedback. Being informed and engaged can help you adapt if rules change.
