New Federal Student Loan Rules Hit July 1 For Wisconsin Borrowers

Graduation

Significant changes are coming to federal student loans July 1, potentially affecting tens of thousands of Wisconsin’s estimated 700,000 federal student loan borrowers.

When President Donald Trump signed his massive tax and spending package last year, it set in motion a laundry list of changes to how people can borrow and repay federal student loans.

One of the most significant changes was eliminating the Saving on a Valuable Education, or SAVE, plan. Beginning July 1, borrowers still enrolled in the plan are going to be contacted by loan servicers about transitioning to a new payment plan within 90 days. Nearly 1 in 5 Wisconsin borrowers were enrolled in the SAVE plan as of March, according to the head of the Wisconsin Coalition on Student Debt.

The package will also limit how much graduate students and parents are able to borrow.

Betsy Mayotte is the president and founder of The Institute of Student Loan Advisors, or TISLA. She told WPR’s “Wisconsin Today” these new caps and repayment options mean students and parents should learn about these newer, smaller loan limits and calculate how much a degree will cost in full.

“Families really need to project how they’re going to pay for the full degree, all four, five or six years,” Mayotte said. “For borrowers that are currently in repayment … they need to start looking at the repayment plans that are going to be available to them and that will best fit in, not only short-term budget, but long-term student loan management strategy.”

The Trump administration claims these changes will make student loan repayment easier and will lower the cost of college. Mayotte said this move may make repayment plans “less complicated” in the long term.

Mayotte explained more about the changes and how they may impact loan delinquency and default.

The following interview has been edited for clarity and brevity.

Rob Ferrett: An estimated 135,000 student loan borrowers in Wisconsin were enrolled in the now-sunset SAVE plan. What are their options if they want to avoid a significant jump in their monthly loan repayment?

Betsy Mayotte: If they’re done borrowing, so as long as they don’t borrow a new loan or have a consolidation go through after June 30, they’ll have options such as Income-based Repayment and Income-Contingent Repayment. There’s also plans that aren’t based on income, such as an interest-only plan called Graduated Repayment or Extended Repayment. They’ll also be able to use a new plan called the RAP — the Repayment Assistance Plan — that’ll be available somewhere around July 1. But for anybody who consolidates or borrows on or after July 1, their only choices will be that new RAP plan or Standard plan that’s based on the balance of their loan.

RF: Parent Plus loans aren’t going away, but there are some changes to this type of loan, including some restrictions. What are the changes and how can families adapt?BM: On the borrowing side, Parent Plus borrowing used to be unrestricted … there was no limit on how much you could borrow, other than the cost of attendance for the undergraduate school. Now there’s a pretty hard limit. They can’t borrow more than $20,000 a year per dependent undergraduate student, and no more than $65,000 total for each dependent undergraduate student.

On the other side of the coin, it used to be that Parent Plus borrowers had to jump through some hoops, but they had access to these plans based on income. For any parents that haven’t consolidated already, or don’t have one in progress or who borrow again on or after July 1, they will have no options for repayment plans. They’ll have a standard plan, and that’s it.

RF: You looked up some Wisconsin-specific data looking at people who were delinquent on their student loans or behind on their loans. What do you see here in Wisconsin?

BM: We are in a delinquency and default crisis. This is honestly one of the most worrisome periods in student loan history that I’ve seen in my career.

From a national perspective, an additional more than 3 million people defaulted on their loans in the last quarter of 2025. To put that in perspective, prior to the COVID-19 pandemic, there were a total of around 3 or 4 million borrowers in default. So we almost doubled that number in the last quarter of 2025.

From a Wisconsin perspective, you mentioned there’s a little over 700,000 Wisconsin borrowers holding federal student loans. Almost 20 percent of those — or 125,000 — are currently in default. The Department of Education has started putting out a new piece of data that they’re calling the “non-repayment rate.” They’re only looking at people who recently left school — so people that have left school since January of 2020 … at the national level, between 20 and 25 percent of them are at least 90 days past due and are on their way to default.

Wisconsin is doing a little bit better than the rest of the country, but you still have half your schools where at least 10 or 20, or a higher percentage, of their recent grads are 90 days or more past due.

RF: What do you tell a student loan borrower who reaches out for help because of these changes?

BM: For people that owe high debts, I use that old expression: “How does one eat an elephant? One bite at a time.”

What I find is helpful to the majority of the borrowers we work with is just being able to educate themselves on what their options are. Using the online tools and calculators like what’s on our website and the Department of Education’s website to understand what your options are, what they’re going to cost you in the short term and what they’re going to cost you in the long term.

With federal student loans, even with all the changes, we have sort of an embarrassment of riches as far as options go. There’s more than a handful of lower payment options. If none of those work, there’s temporary postponement of payments altogether through deferments and forbearances. If life really gives you a hard left hook, there’s even discharges for things like permanent disability, or if the borrower should pass away.

New student loan rules take effect July 1. Here’s how Wisconsin borrowers could be affected. was originally published by Wisconsin Public Radio.