Make Me Smart The changes coming to federal student loans in 2026
Jan 20, 2026
Betsy Mayotte, founder of the Institute of Student Loan Advisors, dives into the turbulent world of federal student loans. She highlights the confusion and anxiety borrowers face amid shifting policies. Betsy explains the SAVE plan and its implications, as well as the consequences of its potential end. She discusses who holds student debt today, the economic effects of loan payments, and the risks for Parent PLUS borrowers. With key changes looming in 2026, Betsy offers crucial advice for families navigating their borrowing options.
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SAVE Plan Left Millions In Limbo
- The SAVE plan expanded income-driven repayment and faster forgiveness but was struck down and then eliminated by Congress.
- About 7 million borrowers remain in SAVE limbo, paused in forbearance until a settlement forces choices.
Forbearance Pauses Progress Toward Forgiveness
- Borrowers in SAVE forbearance currently owe no payments but accrue no progress toward forgiveness or repayment.
- When the settlement ends forbearance most will face higher monthly payments and slower paths to forgiveness.
Borrowers Are Older And Diverse
- Federal student loan borrowers span all ages, with half over 30 and a growing over-65 group.
- Struggling borrowers often owe relatively small amounts due to incomplete degrees rather than massive balances.