Fact Sheet: The Trump Administration is Making Higher Education More Affordable, Expanding Opportunity, and Simplifying Student Loan Repayment

Effective today, July 1, 2026, key provisions of President Trump’s Working Families Tax Cuts Act (the Act) take effect, simplifying student loan repayment, making higher education more affordable, and expanding access to high-quality, short-term education and workforce programs.  

Choose Your New Student Loan Repayment Plan Today! 

Starting today, federal student loan borrowers can enroll in the new Tiered Standard repayment plan or the new income-driven Repayment Assistance Plan (RAP). Instead of navigating several confusing repayment options with varying eligibility requirements and payment structures, borrowers can now consider two simpler plans to manage their student loan obligations.  

Unlike the traditional Standard Repayment Plan, which generally requires fixed monthly payments over a 10-year term, the Tiered Standard repayment plan offers fixed repayment terms of 10, 15, 20, or 25 years based on the amount borrowed. Borrowers with higher loan balances will have longer repayment terms, helping make monthly payments more affordable.    

RAP sets monthly payments based on a borrower's income. Monthly payments are between 1 and 10 percent of a borrower’s income, depending on how much they earn. In addition, their payments will be reduced by $50 per month for each of their dependents. Monthly payments can be as low as $10.    

For the first time, borrowers who make on-time monthly payments in RAP will have any remaining unpaid monthly interest waived, ensuring interest does not continue to accumulate when they are meeting their repayment obligations. 

RAP also includes a matching principal payment benefit. If a borrower's on-time monthly payment reduces the loan principal by less than $50, the federal government will contribute up to $50 each month toward the principal balance. Together, the interest waiver and matching principal payment help borrowers make meaningful progress toward paying down their loan balance each month. 

Borrowers can use the new Repayment Calculator to estimate monthly payments and compare available repayment options. 

The Cycle of Overborrowing is Over 

Starting today, new loan limits are in effect for borrowers enrolling in graduate level programs. These reasonable caps are designed to help prevent students and parents from taking on debt they may struggle to repay while encouraging institutions to reduce costs and make higher education more affordable for American students. 

Colleges and universities are already reporting lowering tuition for American students and families in response to the Act: 

• The University of Kansas will offer new scholarship opportunities to law students. The law school will also utilize its endowment to offer student loans – at a much lower interest rate than the government provides.  

• The University of Santa Clara Law School launched the “Pledge Scholarship,” which will offer a $16,000 tuition scholarship to every incoming first-year student joining its J.D. programs.  

Learn more about these commonsense loan caps here.  

After nearly a decade of debate, Workforce Pell launches today. Following the requisite state approvals, institutions can begin submitting eligible workforce programs to the Department for approval starting July 1. 

Workforce Pell was created to help employers fill critical workforce needs more quickly and strengthen the American economy. Expanding access to short-term programs in high-skill, high-wage, or in demand industry sectors or occupations will help prepare students for careers that are essential to our nation's growth and success, with students taking on little to no student debt. Eligible workforce programs can be as short as 8 weeks.   

Over the past year, many Governors, in consultation with their state workforce boards and institutions of higher education, have been identifying and approving short-term workforce programs in their States. After the Governor approves the program, the eligible institution will apply to the Secretary for approval. After the Secretary approves the program, it becomes an eligible workforce program, allowing students to access Pell Grants. 

Learn more about Workforce Pell here.