Student loan changes leave Black borrowers bracing for higher payments

Millions of federal student loan borrowers faced sweeping changes starting July 1, as provisions from the Trump administration’s tax and spending bill reshaped repayment options, eliminated key loan programs and left Black borrowers, who carry a disproportionate share of the nation’s student debt, bracing for higher payments and fewer choices.

The NAACP and the Debt Collective hosted a livestream to break down the changes, warning that the stakes extend far beyond monthly bills.

“These aren’t just administrative updates, they’re decisions that will shape people’s financial future and the ability to buy a home, start a family, build wealth and invest in their communities,” said Wisdom Cole, senior national director at the NAACP.

Aissa Canchola Banez, policy director at Protect Borrowers, said higher education and student loans took the second-largest hit in the bill.

“Nearly $400 million of cuts to higher education and student loan programs that we know disproportionately benefit Black and Brown borrowers, in particular Black and Brown families, have long been seen as the gateway to ensuring that everybody has equal access to finance a higher education,” Banez said.

The Graduate PLUS Loan program, which once covered the full cost of attendance for graduate students, is gone. “They have completely eliminated that program for students who are enrolling in new graduate programs,” Banez said, though current students are grandfathered in. New Parent PLUS borrowers now face new loan limits as well.

The most urgent concern, Banez said, belongs to the 7.5 million borrowers enrolled in the Biden-era Saving on a Valuable Education (SAVE) repayment plan, who’ve been sitting in forbearance since Republican attorneys general challenged the plan in court.

“If you are enrolled in the SAVE plan, your student loan servicer will begin to send you notices to tell you that you now have 90 days to take action to pick a new repayment plan,” Banez said.

Miss that window, and borrowers get defaulted into the more expensive standard repayment plan. That shift could spike payments by $3,000 to $4,000 a year, according to analysis from Protect Borrowers.

A Government Accountability Office report found the Education Department, following staff cuts under Secretary Linda McMahon, is no longer monitoring student loan servicers at all. Servicers already have a backlog of 530,295 income-driven repayment (IDR) applications that could take more than two years to clear, a warning sign that borrowers may again be steered into costlier repayment plans just as the department prepares to hand off loan administration to the Treasury Department.

The Department of Education had not updated its repayment calculator to reflect the new plans as of this writing. Banez suggested borrowers use the calculator at edcapny.org to get an estimate of which repayment plan works best for them.

New borrowers taking out loans after July 1 are left with just two options: a new tiered standard plan and a new income-driven plan called the Repayment Assistance Plan. Every current income-driven repayment plan disappears after July 1, 2028, except for Income-Based Repayment.

Dr. Shamell Bell of the Debt Collective laid out what’s at stake for Black borrowers specifically. “Student debt is absolutely a racial justice issue, because of the racial wealth gap and generations of unequal access to wages, wealth and opportunity, Black borrowers are more likely to borrow, and borrow more, and carry that debt for longer, especially Black women,” Bell said.

Bell added that Debt Collective members are actively challenging the Department of Education’s elimination of the SAVE plan in court, arguing the agency cannot legally repeal the Revised Pay As You Earn (REPAYE) plan that preceded it without formal rulemaking.

Still, advocates urged borrowers not to panic. “It’s important to note that when you get this notice, it does not mean you need to immediately move off the SAVE plan, but start putting your plan together, start seeing what your monthly payment could look like across the various plans,” Banez said.

Borrowers struggling to reach servicers were encouraged to contact their member of Congress and open a casework file, seek free help at lawhelp.org, or file complaints with the Consumer Financial Protection Bureau.

Minnesota residents can also file complaints with Attorney General Keith Ellison’s office online or by phone: Twin Cities calling area: (651) 296-3353. Outside the Twin Cities: (800) 657-3787.

Keturah Butler-Reed of the NAACP Youth and College Division pushed borrowers toward the bigger fight. “We cannot obtain generational wealth,” Butler-Reed said. “We cannot fight the administration if we don’t fight policy first, and policy is the number one thing.”

For Ryan, a St. Louis Park teacher, the changes hit close to home when he tried retrieving a refund after overpaying his lender last year.

“I started contacting the companies and then [the] Department of Education to try to figure out how to get that money resent to me,” Ryan said. “I would call, and they would say, ‘OK, we’re going to resend you a check, it’ll be there in two weeks.’ Then, ‘It’ll be there in three months.’ Then, ‘It’ll be there in nine months.’ Every time it got worse and worse.”

Six months later, the check finally arrived, after Rep. Ilhan Omar’s office stepped in.

“Ryan called my office when he needed help getting a refund for a student loan overpayment,” Omar posted on social media. “My casework team was able to work with the Department of Education to get his money returned to him.”

“I guarantee that there’s no chance I would have gotten that if it was just me by myself,” Ryan said. “It was super helpful to finally have some representation.”

Clint Combs is a freelance journalist and contributing writer for the Minnesota Spokesman-Recorder. He welcomes reader responses at combs0284@gmail.com.