USA/finances—
By Danielle Smith, producer, Keystone State News Service, a bureau of Public News Service.
Americans are struggling to keep up with their payments as changes to the federal student loan system resulting from President Donald Trump’s One Big Beautiful Bill Act take effect.
One in five borrowers, or nearly 9 million Americans, is in default.
Jessica Newell, a middle school counselor and member of the Philadelphia Federation of Teachers union, said she paid $90 a month under the Saving on a Valuable Education income-driven repayment plan. The plan is no longer available as of July 1 due to federal restructuring, and Newell pointed out her monthly costs have quadrupled.
“I work in Title I, and when I came back online after they litigated for two years and didn’t allow us to pay, now my payments are $440 a month, four times what I was paying,” Newell explained.
Many Borrowers confused by Trump changes
Newell noted a recent survey from the Student Debt Crisis Center revealed many borrowers are confused about the changes to student lending starting July 1 and are struggling to pay their higher loan amounts.
The survey found 67% of borrowers said they can’t afford their new monthly payments, which could signal a bigger wave of defaults in the future.
Since the SAVE plan was eliminated, Newell must now apply for the federal Repayment Assistance Plan. It still allows her to qualify for Public Service Loan Forgiveness, but she noted that instead of being three years away from getting loans forgiven, she is now five years away. The difference means she will end up paying $40,000 in additional costs.
“The bottom line is, Trump can make this right, but he’s choosing not to. Instead of helping working people, he’s crushing our finances, just so billionaires and big corporations can get tax breaks,” Newell contended.
The increased payment is affecting Newell’s other expenses, too, with rent at $1,700. She said realistically, she needs a roommate to split the bill.
During the first year of the second Trump administration, a student loan borrower defaulted every nine seconds, a rate three times higher than before the pandemic. The Trump administration said changes to the federal loan system are meant to simplify repayment options.
