Student Loan Debt Part 1
Let’s Talk… Student Loan Debt
What California Borrowers Need to Know: Part 1
September 21, 2026
You may have seen the headlines or listened to the social media advice reels about all the changes happening to the federal student loan landscape. There is a lot of conflicting information out there, so do know that you’re not alone in your confusion!
The bad news is that there are a ton of changes happening to the system – new program timelines and legal challenges – that will impact student loan borrowers differently, depending on their particular situation. The good news is that the coalition of consumer protection and student loan advocacy groups fighting for borrowers’ rights remains incredibly strong. NextGen remains strongly committed to this work and continues to lead student borrower protection efforts on the California front. I’m going to begin to break down the TL/DR version of what you need to know regarding the student loan environment right now, however, since there is so much going on, this is going to be a two-part blog series – so stay tuned for part 2!
If Your Monthly Student Loan Bill Just Got Bigger, Blame Trump
July 1, 2026 marked the start date for many of the federal student loan system changes that the Trump Administration has been pushing since the start of his second term. Officially passed by the Republican-controlled Congress, H.R. 1 or the so-called “One Big Beautiful Bill” (OBBBA) contains most of the major changes to the student loan system. To quickly summarize, but I will highlight the major changes in detail below, the changes made eliminate or will eliminate certain repayment options, end graduate student loans, place new restrictions on borrowing limits, greatly limit parental options if they took out loans for their child’s education, and create a new repayment plan that puts off any debt forgiveness for a much longer period of time.
After just two months of these changes going into effect, we’ve already heard from many student loan borrowers that they have seen hundreds of dollars in increases to their monthly student loan bill. With so many families struggling to put food on the table and to pay rent, they’re now being pushed even further into the red as their monthly student loan bills dramatically increase. One borrower shared with us that they are no longer able to put anything away into savings and are faced with having to choose between paying their student loan bill or paying for food. The so-called One Big Beautiful Bill that was celebrated by Trump and Congressional Republicans has turned out to be one big headache for student loan borrowers!
Don’t despair, however! Student loan borrowers, advocates, civil rights groups, education equity organizations, labor unions, and state and local governments across the country are fighting back. And NextGen is standing right alongside them! Lawsuits have been filed on behalf of student loan borrowers challenging many of the changes by the federal government. Many of the legal cases are ongoing but there are two programs that are the focus of most questions – what is going on with the SAVE and PSLF programs?
Two Most Asked About Programs – SAVE and PSLF
The Saving on a Valuable Education, or SAVE Plan, was the most generous student loan repayment plan created under the Biden Administration. It was an income-driven repayment (IDR) plan that offered affordable monthly payments and a pathway to loan forgiveness. However, due to the actions of certain conservative special interest groups along with support from the Trump Administration, a handful of red states sued the federal government (then under President Biden) to end the SAVE plan. Unfortunately their lawsuit was successful and the final decision ending the SAVE plan was issued by the Eighth Circuit Court just this past March.
With the SAVE plan ending, the nearly seven million Americans enrolled in the plan will now need to apply for another IDR plan, otherwise they will automatically be placed in the Standard Plan. The earliest any borrower in SAVE will see this automatic transfer into the Standard Plan if they don’t get around to switching to a new plan will be September 29, 2026. However, beginning on July 1, 2026, loan servicers started issuing 90-day formal notices requiring borrowers to exit the SAVE plan. These notices should NOT be confused with any other emails or notices from the U.S. Department of Education as your 90-day deadline doesn’t start until you get a notice from your servicer(s). Borrowers who have taken out a loan before July 1, 2026 (the entirety of borrowers under the SAVE plan) will still have other IDR options to choose from, or what can be considered the less generous “older” or “grandfather” IDR plans.
The Public Service Loan Forgiveness program, or PSLF, is a debt forgiveness program for student loan borrowers who work in public service. Under PSLF, any remaining student loan balance is forgiven if you work for a qualified public service employer, make 120 cumulative payments (essentially after 10 years), have a qualified student loan, and are in a qualifying repayment plan. However, under the Trump Administration, the U.S. Department of Education designed new PSLF rules that would have disqualified certain government and nonprofit employers from the PSLF program if the Department found that the employer engaged in activities with a “substantial illegal purpose”. This new term basically means any work activities that the Trump Administration disagreed with such as: anti-discrimination work, immigration support, or gender-affirming care for minors.
The new rule has already been challenged in several courts across the country. In the most recent court order, a federal court sided with a broad coalition of local governments, labor unions, and nonprofit organizations against the Trump Administration and ruled that the new PSLF rule is unlawful. With that court ruling in hand, we’re awaiting whether there will be a response from the federal government but for now no further changes to the PSLF program are expected. However, it should be noted that the OBBBA also made some changes to the PSLF program that carry new implications.
What You Need To Know If You Have Student Loans From BEFORE July 1, 2026 (Part 1)
OBBBA now puts student loan borrowers into two different repayment tracks and changes student loan availability. This blog is part 1 of a two-part blog post that will go over each track separately. Let’s begin with those borrowers who took out a student loan BEFORE July 1, 2026, so it’s been a year or more since you graduated, maybe you are well into your career, and maybe you have been in a repayment program.
For some, none of the changes that kicked in July 1st will actually impact you for the next couple of years! You will continue to have access to the “grandfather” or existing repayment plans, such as Income Driven Repayment (IDR) plans, Income Based Repayment (IBR) plans, Income Contingent Repayment (ICR) plans and Pay As You Earn (PAYE) plans as well as the Standard Plan and graduated and extended plans. However, note that the ICR and PAYE plans are set to end on July 1, 2028 and if you’re on those plans you will need to switch at that time.
However, the July 1st changes will impact you if you:
- Exit SAVE and do not take out any new loan or consolidate your loans after July 1st, you are eligible for IBR and the new Repayment Assistance Plan (RAP).
- Consolidate or take out a new loan after July 1st. If you consolidate your loans you will lose access to your current repayment options and will only have the new options available to you.
- Access the new Repayment Assistance Plan (RAP) plan.
- Owe “Parent PLUS” loans borrowed for your child’s education.
The new repayment plans:
- Repayment Assistance Plan (RAP) is similar to an IDR plan but with significant changes such as the lowest monthly payment is $10 no matter your income, monthly payments are based on 1%-10% of your Adjusted Gross Income (AGI), and the repayment timeline is 30 years or 360 monthly payments. Additionally, payments on the RAP plan do NOT count towards IDR forgiveness credits on IBR, and Parent Plus loans are not eligible for RAP.
- Though not necessarily entirely new, the Standard Plan has greatly changed as well. Borrowers with new loans or consolidated loans after July 1st will be initially placed in the Tiered Standard Plan unless you apply for the RAP plan. With the Tiered Standard Plan, you pay a fixed monthly payment until you pay off the student loan. The repayment timeline is based on your loan balance and there is no debt forgiveness, meaning you will end up paying the entire loan balance and interest accrued.
Bad news for parents: If you took out a Parent PLUS loan to help pay for your child’s education and consolidated before July 1st and didn’t take out any new loans after that date, then you can still pay your consolidated loan in an income-driven repayment plan but you must enroll before July 1, 2028. But if you did not consolidate before July 1, 2026 then you will NOT be able to repay them in an income-driven repayment plan and are limited to fixed repayment plans such as the Standard or Extended plan. If you consolidated before July 1, 2026 but then took out new loans or consolidated after this date, then you will NOT be eligible to repay ANY of your Parent PLUS loans in an income-driven repayment plan. Your only option would be the new Tiered Standard Plan.
What can you do?
If you’re still feeling confused, overwhelmed, sad, frustrated or mad (maybe all of these), then we invite you to join the fight and channel your energy into improving this situation! We at NextGen have joined forces with a broad national coalition – labor, consumer protection, student, borrower advocate, and civil rights organizations – in a “One Big Bill” campaign to elevate the stories of millions of Americans like you with student loan debt. The campaign will document the exponential increase in student loan bills from the OBBBA and the financial crisis this Administration has placed on working families.
You’re invited to share your story about how monthly student loan bills are impacting you and your household – share your story here. We will share these real life experiences with policymakers so that they understand the financial devastation hard working families are going through and urging them to solve this problem and provide much-needed relief.
Thanks for reading and part 2 of this blog will be headed your way soon,
