- There are new student loan borrowing limits for parents of students and graduate students
- A Biden-era loan repayment program is out, new repayment plans to start soon
- Michigan offers student loan webinars to make sense of changes
It’s the time of year when Michigan high schoolers commit to the colleges they plan to attend. For many, that means signing up for a federal student loan, and several changes are coming that will affect not just future student loan borrowers, but those already in debt.
Michigan residents have $51.6 billion in federal student loan debt, according to a 2025 estimate from the Education Data Initiative.
Here is what to know about the federal changes and what they could mean for Michigan borrowers
1. Time’s running out
Many student loan borrowers will need to select a new repayment plan because of the end of a Biden-era student loan payment program.
After the US Supreme Court struck down former President Joe Biden’s student loan forgiveness program, Biden launched the Saving on a Valuable Education (SAVE) plan.
The repayment program would base minimum payments on a borrower’s income and accelerate the timeline for borrowers to get their loans forgiven after making several years of payments.
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But that plan has been tied up in the courts. Borrowers enrolled in the plan have not been required to make payments and previously were not accruing interest on their unpaid loans.
Last Friday, the US Department of Education announced it would begin notifying 7.5 million borrowers that they need to select a new repayment plan.
“For years, borrowers have been caught in a confusing cycle of uncertainty, but the Trump Administration’s policy is simple: if you take out a loan, you must pay it back,” said Under Secretary of Education Nicholas Kent. “Borrowers currently enrolled in the illegal SAVE Plan will be given at least 90 days to enter a legal repayment plan of their choice, including the new Repayment Assistance Plan, which will launch on July 1.”
The federal government said federal loan servicers will notify borrowers directly and communicate when their 90-day countdown starts.
Borrowers who do not select a new repayment program will be enrolled automatically in either the Standard Repayment Plan or a new Tiered Standard Plan that offers fixed terms based on a borrower’s total outstanding balance, the US Department of Education said.
In January 2024, there were close to 240,000 Michigan student loan borrowers enrolled in the SAVE repayment program, Bridge previously reported.
Borrowers can apply for repayment plans here.
Ryan Fewins-Bliss, executive director of the Michigan College Access Network, told Bridge his advice to borrowers is to “take a beat” and wait to select a new repayment plan until the federal government forces them to.
“I think there is a lot of panic for the 20-somethings and 30-somethings in the throes of repayment,” he said.
(Editor’s note: MCAN is a Bridge Michigan funder. It had no role in the reporting, writing or editing of this article.)
2. New repayment options are coming
Under the Working Families Tax Cuts Act, the federal government is launching two new repayment options July 1.
When student loan borrowers graduate or leave school, they select a repayment program.
Historically, the federal government has offered several repayment plans including a standard plan where loans are done in 10 years and income-driven repayment plans. Those plans’ minimum payments are determined by a borrower’s income and have had loan forgiveness options.
The government is launching two new plans this summer.
The new income-driven repayment plan is called the “Repayment Assistance Plan.”
The new “Tiered Standard Plan” goes for either 10, 15, 20 or 25 years depending on how much in total loans a person borrowed.
Borrowers who took out their loans before July 1 will still have access to other repayment options but those who consolidate their loans or already have loans and take out more loans won’t be able to use the old repayment options, PBS News reported.
Last year, the Trump administration and Congress made several changes to student loan repayment options that will take effect over the next two years. For one, new student loans will no longer have the option of deferment because of unemployment or economic hardship.
The Michigan Department of Lifelong Education, Advancement, and Potential (MiLEAP) plans to holdtwo webinars this month focused on student loans. The state department also has guidance for current parent borrowers on what to do to remain eligible for income-driven repayment options.
Erin Burd, student loan borrower advocate at MiLEAP, told Bridge she recommends borrowers and their parents seek out information from the state and federal government.
3. New borrower requirements are also coming
The federal government is instituting new borrowing caps for graduate students and parents of students.
The new rules go into effect July 1, but students are already facing the reality in their financial aid offer letters, said Colby Cesaro, vice president of the Michigan Independent Colleges and Universities group.
“I”m concerned about middle class families being able to finance higher education for their kids.”
Cesaro recommends parents look into lending options at their local bank or credit union and students to apply to every private scholarship they can find, saying “it all adds up.”
She said the new restrictions add more complications because students or their families may need to use a combination of federal loans and private loans with different borrowing terms.
4. Michigan offers ways to lower the cost of college
Meanwhile, Michigan leaders have tried to make college more affordable through scholarships and grants, tuition-free community college and dual enrollment opportunities.
While Michigan stopped issuing student loans in 2008, the state offers several programs aimed at reducing the cost of college.
The Michigan Achievement Scholarship means recent high school graduates may qualify for tuition-free community college or up to $5,500 off a year for a four-year in-state college or public university.
Michigan Reconnect offers tuition-free community college for adults age 25 and older who don’t already have a college degree.
There are several other state programs including the Tuition Incentive Program, which pays for college expenses of eligible Medicaid recipients. See the full list of state programs here.
Many programs are only offered to students who complete the Free Application for Federal Student Aid, also known as the FAFSA.
The state does not require high schoolers to complete the form to graduate high school. But 67 school districts were recently awarded a total of $10 million to implement programs that require students to fill out the form or an opt-out form to graduate.
Roughly 45.7% of the high school class of 2026 has completed the FAFSA, according to the Michigan College Access Network’s FAFSA tracker. That’s up slightly from this time last year.
The Associated Press contributed to this report.
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