Changes to student loans are here: What Michigan borrowers should know

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July 1, 2026, 6:08 a.m. ET
More than 1.3 million Michigan residents with student loan debt will be impacted by the changes.
The changes will impact how parents can borrow and how loans are paid back.
The changes go into effect on July 1.
More than 1.3 million Michiganders with student loan debt will be impacted by a major overhaul of federal student loans that takes effect starting July 1.
A series of changes tied to the signing of the One Big Beautiful Bill Act will impact how much parents can borrow and how loans are paid back.
Below are key changes Michigan residents should be aware of:

How are Michigan residents affected?
In Michigan, nearly 1.38 million borrowers collectively owe $53.2 billion, according to federal data from March.
What happens if I have a Parent PLUS plan?
Until now, Parent PLUS loan borrowers have been able to consolidate and enroll in the only income-driven repayment plan, which offers payments based on the borrower's income with a monthly cap of 20% of discretionary income.
That option goes away on July 1.
Parents are now left with standard repayment plans and fixed monthly payments based on the total amount borrowed, according to a news release from the Michigan Department of Treasury.
New federal borrowing limits cap the Parent PLUS Loan at $20,000 per year and $65,000 in total per student, according to a fact sheet from the National Association of Student Financial Aid Administrators, a nonprofit focused on information dissemination related to federal student aid programs.
The loan won't be capped if the student was enrolled in the program before June 30, 2026, and the parent has taken a Parent PLUS loan disbursement, or the student had a direct loan disbursed before July 1.
What happens if I have a SAVE plan?
The Saving on a Valuable Education (SAVE) repayment plan launched under former President Joe Biden ends July 1.
Starting July 1, federal loan servicers will begin issuing notices to the 7.5 million borrowers who enrolled in the SAVE plan, instructing them to exit the SAVE plan and enroll in a different repayment plan within 90 days, a U.S. Department of Education news release said.
Borrowers who do not transition plans within the 90 days will be automatically enrolled in new payment plans that will be available beginning July 1. Servicers will notify borrowers of their specific 90-day deadline.
In January 2024, there were close to 240,000 Michigan student loan borrowers enrolled in the SAVE repayment program, Bridge previously reported.
What are my options now that SAVE is going away?
The Repayment Assistance Plan (RAP) and a new Tiered Standard Plan.
Under RAP, a borrower’s monthly payment is based on that borrower’s income and number of dependents, according to the U.S. Department of Education.
The new Tiered Standard Plan will offer fixed terms —10, 15, 20 or 25 years — based on a borrower’s total outstanding loan balance, the department said.
Is there anything I can do to save some money?
Federal student loan borrowers enrolled in auto pay will be eligible for a 1% interest rate reduction beginning July 1, according to a U.S. Department of Education news release. Borrowers who enroll in auto pay by Sept. 30, 2026, or who are already enrolled, will receive the interest rate reduction through June 30, 2028.
USA Today reporter Medora Lee contributed to this article with prior reporting.
Contact Adrienne Roberts: amroberts@freepress.com