What Black borrowers should know about Trump’s July 1 student loan deadline
TheGrio...
Many changes to the federal student loan system will take effect following President Trump’s signing of the “One Big Beautiful Bill Act.”
An important deadline has approached for student loan borrowers, as the Trump administration moves to reshape the federal student loan system, impacting student loan and repayment programs for millions of Americans.
Beginning July 1, many changes to the federal student loan system will take effect. As a result of President Trump’s signature “One Big Beautiful Bill Act,” signed on July 4, 2025, some student loan repayment programs will cease to exist while new ones will become available for enrollment. For those seeking to take out new student loans, there will also be limits on how much they can borrow.
All of the upcoming changes are a part of the Trump administration’s agenda to overhaul the federal student loan system, administered by the Department of Education.
Here’s what Black student loan borrowers should expect.
Major changes to student loan repayment programs
The SAVE Plan, a student loan repayment program launched under President Joe Biden in 2023 and saw monthly payments as low as $0, will officially be terminated by the Trump administration. That means the 7 million borrowers who enrolled in the cost-saving plan, which was paused due to lawsuits from Republican-led states, will be kicked off the program and automatically re-enrolled in another available plan if they do not voluntarily choose one.
Borrowers should have already received notice of the upcoming changes and are urged to act quickly to ensure they have the best option available.
Trump’s OBBBA also established two new programs: the Repayment Assistance Plan, a 30-year option that also launches on July 1, and the Tiered Standard Plan, a standard option that gives loans a 10- to 25-year lifespan.
Other options include the existing plans, Pay as You Earn, or PAYE, and the Income-Contingent Repayment, or ICR, plan, which will both be phased out in 2028. Borrowers are eligible for these two programs only if their monthly payments under RAP or IBR would be higher. What’s more, student borrowers enrolled under the SAVE Plan will likely see their monthly balances increase by hundreds of dollars.
And for those who will not be taking out any further federal student loans, there remains the Income-Based Repayment Plan, which has existed since 2008.
Because Black borrowers face disproportionate barriers to educational access and wealth attainment, changes to the student loan system will have an outsized impact on them.
“For Black students, and Black borrowers in particular, this really hits them hard,” says Democratic strategist and education expert Ameshia Cross.
Cross notes that as a result of socioeconomic conditions, Black borrowers tend to take out more in student debt to pay for higher education, and according to statistics, they are less likely to pay it back and take longer to do so.
According to the National Association of Student Financial Aid Administrators, 13% of Black borrowers will likely never repay their student loan debt as a result of these systemic economic barriers.
Limits on how much students and parents can borrow
Student loan borrowers will also see new limits to how much they can borrow. According to The Hill, parents who take out Parent PLUS loans on behalf of their children will be capped at $20,000 per year, or a total limit of $65,000. However, there are some exceptions. If a student was enrolled in the program before Tuesday, June 30, 2026, and received a Parent PLUS loan disbursement for that program, or if the student received a subsidized or unsubsidized Direct Loan for that program before Wednesday, July 1, those loans will not be subject to the limits.
Graduate students will also be limited by how much they can borrow. They will be capped at $20,500 annually and $100,000 cumulatively. Professional students will be limited to $50,000 a year and $200,000 overall, though actions taken by the Trump administration to cap borrowing are currently being challenged in courts. The Trump administration also established lifetime limits for federal student loan borrowers, capping them at $257,500.
While these changes will almost certainly raise monthly costs for student loan borrowers, the Education Department has offered a modest opportunity to save by reducing interest rates by 1% beginning on July 1 for borrowers who enroll in auto pay for their loans. Borrowers have until Sept. 30 to enroll for autopay, and the cost-saving program will be available through June 30, 2028. Borrowers enrolled in autopay are already receiving a 0.25% reduction in their interest rates.
Student loan debt and affordability crisis collide
The major changes to the federal student loan program and subsequent increased balance sheets come at a time of deep financial strain for most Americans, most especially Black Americans, who are facing a disproportionately rising unemployment rate and widening racial wealth and wage gap.
According to a poll conducted by Realtor.com, a record 25 million young adults under 35 are still living with their parents because they can’t afford to live on their own.
“We know that there are people who cannot afford rent, many of them cannot afford to leave their parents’ house. We know that the cost of gas, the cost of groceries, the cost of living writ large looms over them,” Cross told theGrio. “[Black borrowers] are watching their student loan debt burden just balloon almost immediately with no other option in sight, with a backdrop of more grievance when it comes to our economic structure right now.”
Cross described the current conditions for student loan borrowers as a “firestorm waiting to happen” and noted that there’s “a lot of desperation.”
As a result, “predatory” actors are reaching out to student loan borrowers in an attempt to capitalize financially from that desperation, said Cross, who added, “Some of it is driven by foreign entities.”
“There is nothing stopping the misinformation campaign that the Department of Education has done absolutely nothing to try to quell, and students are desperate to figure out what they need to do,” she explained.
What’s more, millions of student loan borrowers are already in default. The Trump administration has already threatened to begin garnishing wages of delinquent borrowers; however, they have hit pause on that plan for now.
Cross said the “murkiness” of the student loan system is “by design,” arguing the administration is deliberately trying to “punish Black students, Black graduates, and Black talent.”