For the past five years Monica Setti hasn’t had to worry about making payments or interest accruing on her federal student loans.

It was a welcome break for the Portland mother of two. The repayment relief allowed her to focus on priorities such as her family and a career change from special education teacher to a mind-body practitioner.

“I’m recently divorced. I’m on state medical insurance and my income is not that great right now,” Setti said. “Every dollar is really important.”

But recent changes have hurled the more than $50,000 of student loans she owes to the federal government back to the top of her mind. Setti said the changes are confusing and add another layer of uncertainty into her life.

“I don’t feel like this is what I said I signed up for at the beginning,” Setti said about paying back the loans she took out more than a decade ago to attend Portland State University for her undergraduate degree in geography and master’s degree in special education.

“The federal government gets to change [repayment] rules and we just have to keep pingponging around?” Setti asked. “There’s a part of me that doesn’t appreciate that as a consumer.”

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Setti is not alone. Millions of borrowers across the U.S. are having a difficult time making sense of recent policy shifts impacting their federal student loans.

The U.S. Department of Education says the changes improve and simplify the student loan repayment system. But the complex changes have left borrowers feeling paralyzed, anxious and misled.

SAVE is no more

This year’s student loan repayment changes largely stem from two sources: court decisions and the passage of the reconciliation bill, also known as President Trump’s One Big Beautiful Bill.

“Part of what is causing confusion for folks is that there are several things happening simultaneously,” Oregon Student Loan Ombudsman Lane Thompson said. “One of the biggest things that’s changed is that the SAVE plan no longer exists.”

The Biden administration introduced the Saving on a Valuable Education, or SAVE, repayment plan in 2023, touting it as the most affordable income-based plan. About one in every five student loan borrowers in Oregon were enrolled in this payment plan last year.

People enrolled in SAVE have been pushed and pulled in different directions since it officially launched in 2024. Lawsuits challenging the plan forced loans back into forbearance, essentially extending a student loan payment pause that began at the start of the pandemic.

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The pause extension, which included zero interest accrual, was a relief to many borrowers.

“I haven’t had to think about my student loans for years,” said Portland resident Austin Foster. She graduated from the University of Oregon in 2013 with a degree in journalism. She took out about $30,000 in student loan debt.

“My loans have been deferred. It’s been in forbearance. It’s not been gaining interest,” she said.

But that’s no longer the case. A court decision this spring and the July 4 reconciliation bill put the final nails in SAVE’s coffin. A few months later The Education Department announced it would resume charging interest on all loans still in the SAVE plan starting Aug. 1.

“I’m starting to see interest on my loans which is terrifying because it was $114 of interest last month,” Foster said, who has $9,500 of student loans remaining to pay off.

An analysis from the Student Borrower Protection Center estimated that the nearly 119,000 Oregonians whose loans were under the SAVE program would see their balances grow by an average of about $300 a month on interest alone, or close to $3,400 a year. The Education Department has not yet set a date to move borrowers off the now defunct plan.

Foster also bet on a student loan forgiveness campaign promise made by the Biden administration. The plan would have canceled up to $20,000 in federal student loans for eligible borrowers. She saw no reason to make payments on her loans if they would eventually be forgiven.

The plan was blocked by the Supreme Court in 2023.

“It made me feel pretty let down,” she said. “I think a lot of people like me got our hopes up that the burden of carrying student loans was going to go away.”

Now Foster, who’s currently in between jobs, is scrambling to come up with cash to make a student loan payment. The thought of her student loan balance growing has become a constant weight on her shoulders, she said.

“It makes me depressed. It makes me anxious,” Foster said. “It makes me not want to leave the house because any time I leave the house I think, ‘Oh, that’s gas money.’”

More changes coming to repayment, forgiveness plans

In addition to other changes to student loans, this year’s reconciliation bill will also phase out a suite of other preexisting income-based repayment plans by 2028.

These plans will be replaced by the Repayment Assistance Plan, or RAP. This new plan departs from previous affordable plans by basing payments on a borrower’s adjusted gross income rather than discretionary income, or earnings beyond what’s needed for taxes, housing, food and other basic expenses.

Current and future college students who take out loans after July 1, 2026 will only have access to two repayment plans to choose from: RAP or a 10-year fixed payment plan not tied to income.

The Public Service Loan Forgiveness program, PSLF, could become narrower in scope too. The program cancels the remaining loan balances of borrowers who make 120 payments, or about 10 years of payments, while employed by a nonprofit or government-related job.

The Education Department has proposed a new regulation that would limit PSLF qualified employers. According to its press release, the proposal “halts PSLF benefits to employees of organizations that are undermining national security and American values through illegal means, and therefore not providing a public service.”

Critics say the language used in the proposed rule is too vague and could be used as a political tool against organizations and municipalities that do not align with Trump administration priorities. The proposal is currently undergoing a negotiated rulemaking process and if finalized, it would take effect on July 1, 2026.

All of these changes come on the heels of Trump Administration directives to cut costs at government agencies. The Education Department has seen its workforce cut in half this year. It’s unclear how the layoffs will impact the rollout of the department’s new student loan rules.

‘Pick a plan and stay with it’

With all the uncertainty, complexity and many changes surrounding student loans, Oregon’s student loan watchdog worries that borrowers will miss out on benefits that are still in effect.

“I have the feeling that intentionally or unintentionally, a lot of these changes have a chilling effect on people taking advantage of the programs that do exist and are available to them,” Thompson said.

She pointed out programs like PSLF as an example. Borrowers who apply for this program are still seeing their loan balances canceled, though at a much slower rate than during the Biden administration.

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Current student loan holders can also temporarily benefit from lower monthly payments from the preexisting income-based repayment plans until they are phased out in 2028. As of this month, applications for those programs are still available.

The bottom line for borrowers is that they signed a contract with the federal government to take out these loans.

“These loans will be collected. They’re going to get this money from your tax return. They’re going to garnish wages,” she said. “I always recommend that people face the dragon, as it were, and see what might be possible for them right now.”

On the flip side, taking no action or ignoring loan balances would be detrimental to borrowers.

Thompson isn’t a financial advisor and can’t give specific advice to the borrowers who contact her. But she said there are nonprofit organizations and government agencies who do that kind of advising, such as a housing counselor certified by the U.S. Department of Housing and Urban Development.

These counselors are trained to help people chart a path that will lead to zero student loan debt.

“Pick a plan and stay with it,” she said. “Get on an income-driven repayment plan and work towards forgiveness or pay down your loans as quickly as you can.”

Setti understands that she’s obligated to pay back her loans. But she says the unpredictable nature of the student loan system, from this year alone, is making it difficult to come up with a plan to repay them.

For now, she plans to apply for the Pay As You Earn program, one of the several income-based repayment plans that will sunset in three years.

“It’s hard to know how your life is going to be two months, two years, 20 years from now,” Setti said. “I think a lot of the repayment options are based on this idea that we know what the future is going to look like.”

Setti’s worried she could be making the wrong decision. Thompson said that worry is normal.

“The reason we have so much anxiety about our loans is related to a stigma around money,” Thompson said. “We need to talk to each other about our debt. We need to use our resources and face it head-on.

“We can do that together.”

News Source : https://www.opb.org/article/2025/09/08/oregon-borrowers-student-loan-replayment/