Student Loan Updates for June 2025

Student Loan Changes Are Hotter Than These Summer Temps!

As summer heats up, so is the student loan landscape, and not necessarily in ways borrowers hoped. And let’s be honest: trying to follow student loan policy right now is confusing. The headlines are overwhelming, servicer advice is inconsistent, and delays are stacking up fast. But the question we hear most often is simple: “What should I be doing?”

Here’s the good news: you don’t have to figure it out on your own. This quick update breaks down the key moves that could save you time, stress, and serious money. We’re here to help you cut through complexity and gain the clarity every borrower deserves. And if you know someone else stuck in student loan limbo, forward this their way. Having peace of mind is the new power move, and it starts with a smart plan.

Latest on the GOP Budget Proposal

We’ve been reporting for months on the major student loan provisions in the “Big, Beautiful Bill Act.” As you may have seen, the House version passed several weeks ago. Last week, the Senate released its own long-awaited bill. While we were hopeful the Senate would take a softer approach, their proposal is just as sweeping. While the two bills are very similar, there are a few notable differences. We’ve created a detailed side-by-side comparison here.

SAVE Plan and Forbearance Update

It’s been over 100 days since the 8th Circuit Court ruled against the SAVE Plan and instructed the lower court to expand the injunction. Yet, there’s still no final ruling or clarity from the lower court.

In the meantime, borrowers caught in SAVE forbearance (a.k.a. “SAVE purgatory”) are facing mixed messages. On June 1st, MOHELA sent a confusing notice to nearly all SAVE participants suggesting that their loans were accruing interest; THIS IS NOT ACCURATE! Check the interest details further down in the letter: they should reflect a 0% interest rate.

Backlogs in IDR and PSLF Processing

Due to a recent lawsuit, the Department of Education (DOE) is now publicly reporting application backlogs. The numbers are alarming: nearly 2 million IDR applications are pending, and only 80,000 were processed in April. Similarly, 50,000 PSLF Buyback applications are queued with only 2,000 processed.

However, there is recently updated guidance from MOHELA. A new message on their website instructs borrowers who submitted IDR applications before April 27th to submit a new application. According to the notice, recent system updates are now allowing MOHELA to process applications with verified income more quickly. Previously, applicants often had to upload income documents manually. Supposedly, this change will allow them to process applications much faster. If true, this should apply to all servicers and not just MOHELA. Your old applications will be cancelled when you submit new ones. For those of you looking to abandon the SAVE forbearance and get back into repayment, this may be a good time to do it.

New Student Loan Interest Rates

For students borrowing in the 2025–26 academic year, the new Federal Direct loan rates are slightly lower but remain historically high:

• Subsidized loans: 6.39% (down from 6.53%)
• Unsubsidized loans: 7.94% (down from 8.09%)
• PLUS loans (Parent/Grad): 8.94% (down from 9.08%)

Rates are set in May each year based on the 10 year 10-Bill action, plus a spread (markup). With the Federal Reserve holding interest rates steady over inflation concerns, student loans continue to carry elevated borrowing costs for the third straight year.

ICYMI: Webinar Recording

We recently hosted a webinar to break down the latest developments in student loan legislation and highlight practical repayment strategies. The session, while tailored for medical residents and practitioners, is relevant to anyone managing six-figure student loan debt. Click here to access the recording. Share it with your peers: it’s worth the 30 minutes.

Looking Ahead: What You Need to Know

The House and Senate are aiming to reconcile their proposals within the next two weeks, with a final bill possibly landing on the President’s desk by July 4th. If passed, this legislation would reshape the student loan landscape, possibly limiting future borrowing, removing forgiveness paths for certain professions, and forcing borrowers into stricter repayment tracks.

Here’s what you can do now: Don’t wait for Congress to decide your financial future. With proposals on the table that could eliminate subsidized loans, restrict PSLF eligibility, and redefine IDR plans, it’s critical to understand how your student debt strategy may need to change. Our team is here to help you navigate the uncertainty and protect your progress.

Schedule a consultation today to review your loans and prepare for whatever comes next.