Wisconsin Student Loans Face July 1 SAVE End, New Limits
Nearly 1 in 5 Wisconsin borrowers were in SAVE when federal student loans changed on July 1. The shift ends that plan and moves borrowers into a new repayment path within 90 days.
For families and borrowers, the change affects an estimated 700,000 federal student loan borrowers in Wisconsin. Betsy Mayotte, president and founder of The Institute of Student Loan Advisors, said: "For borrowers that are currently in repayment … they need to start looking at the repayment plans that are going to be available to them and that will best fit in, not only short-term budget, but long-term student loan management strategy."
July 1 changes for Wisconsin
July 1 is the date that matters for borrowers already in SAVE. Loan servicers are to contact those borrowers about moving them to a new payment plan within 90 days, and borrowers who are done borrowing and do not take out a new loan or have a consolidation go through after June 30 will have more than one path available, including Income-based Repayment and Income-Contingent Repayment.
Families with federal loans also face a wider reset in how they plan college financing. The tax and spending package signed last year by President Donald Trump eliminated the Saving on a Valuable Education plan and set in motion the changes now taking effect.
RAP and Standard plans
Borrowers who consolidate or borrow on or after July 1 will have only two choices: the new RAP, or Repayment Assistance Plan, and the Standard plan based on the balance of the loan. Mayotte said those options may be "less complicated" in the long term.
The divide is sharp for borrowers depending on when they act. If a borrower is already done borrowing, the menu is broader; if a new loan is taken out on or after July 1, the menu narrows to RAP or Standard.
Parent Plus limits in Wisconsin
$20,000 a year per dependent undergraduate student is now the ceiling for Parent Plus borrowing, and the total cap is $65,000 for each dependent undergraduate student. Parent Plus borrowing had been unrestricted other than the cost of attendance for the undergraduate school.
"Families really need to project how they’re going to pay for the full degree, all four, five or six years," Mayotte said. That warning now lands against a hard cap where there was once far more room to borrow, forcing parents to weigh the annual limit against the total amount they can take on for one student.
