GEOFF BENNETT: Federal student loans will undergo# major changes starting July 1.

The changes will## not only restructure the loan system, but also# repayment options for millions of Americans.

Stephanie Sy tells us more.

STEPHANIE SY: Geoff, some borrowers might see# higher monthly payments.

Others will have to deal## with stricter caps on how much they can borrow,# and there will be fewer loan forgiveness options.

Four key revisions include an increase in interest# rates for most loans.

One benefit, a discount of## 1 percent for eligible borrowers who enroll in# autopay.

The elimination of the Biden era SAVE## Plan, which affects 7.5 million borrowers, and new# borrowing caps for graduate and Parent PLUS Loans.

For more on how all these changes will# further impact folks and their finances,## I'm joined by Danielle Douglas-Gabriel, national# higher education reporter for The Washington Post.

Danielle, welcome to the "News Hour."

So let's jump right in with this new# discount being offered to borrowers.## Is 1 percent going to make a dent for a lot of# folks?

What should we know about that benefit?

DANIELLE DOUGLAS-GABRIEL, The Washington Post:# Certainly, over the lifetime of the loan,## it does make a difference in terms# of how much you end up paying.

Unfortunately, this is only good for two years,# for people who are hoping that this is for the## life of the repayment cycle, but it could mean# it make a significant difference for people who## have higher interest rates and for people who# have larger loans.

So it's worth looking into.

STEPHANIE SY: So, a big question is what# happens to these seven million folks that## were on the Biden era SAVE Plan.

That# ends on July 1.

Critics of this plan,## of course, said it overpromised,# it was too generous.

But millions## of borrowers plan their budgets around it# and saw those monthly payments skyrocket.

Do the new replacement options# out there help those folks out?

DANIELLE DOUGLAS-GABRIEL: For some borrowers,## it won't be that much of a difference# in their pay repayment plan.

But,## for many borrowers, it's -- it could be# a pretty significant jump in their bill.

Keep in mind that almost half of the people# who were on that SAVE Plan had incomes low## enough that they qualified for zero# monthly payments.

That's not going## to be the case on the payment plans# that they will have to switch into.

Even with the new repayment plan that's# coming online July 1, you still have to pay## $10 a month.

And there are a lot of# borrowers I have spoken to who said that## they certainly cannot fit another payment# in their household budget at this time,## when they're dealing with inflation in# grocery prices, gas prices, and the like.

So it's going to be a tough# road ahead for some borrowers## who are on the lowest income of the SAVE Plan.

STEPHANIE SY: So would you expect that you would# continue to see defaults on student loans go up,## as we have been seeing for# the last few years anyway?

DANIELLE DOUGLAS-GABRIEL: I think there's a# real risk of that right now.

We have a pretty## high delinquency and default percentage# at this stage.

I think there are about## nine million people who are in default on their# student loans who are behind by several months.

And a lot of economists are worried that# switching all of these borrowers out for of## SAVE and just people moving into some of these# new repayment plan options could increase that## spike.

Certainly, the Department of Education# is trying to get the message out.

They have## been e-mailing borrowers, they have been# notifying them of these coming changes,## the need to switch out of SAVE for several months.

I do think that this interest subsidy# that's in play for two years, the autopay,## is another way to try to encourage borrowers# to go back into consistent repayment and to## stay current on their loans.

Will it be# successful?

I think it's too soon to tell,## but it's certainly something worth watching as# -- over the next six months as we start to see## borrowers migrate out of some of these# plans into some of these newer options.

STEPHANIE SY: Danielle, I'm hearing a lot of# borrowers, online especially, expressing their## frustrations that they really don't know what to# do next, that they don't really trust the system## anymore, and that they feel like the rules have# changed enough that they're not sure what to do.

Here's what one woman said on TikTok.

CAYLIE PORTER, Student Loan Borrower: I have# no idea what the heck I'm supposed to do.

I'm## going and looking at some of these repayment# plans, and some of them look a little insane,## some of them not terrible, but I# don't know what I'm committing to.

And then I'm trying to get online and get more# information.

None of this stuff makes sense to me.

STEPHANIE SY: So this new Repayment Assistance# Plan, or RAP, has been described, as you know,## by the Department of Ed as a simpler income# plan.

Is it simpler -- income repayment## plan.

Is it simpler?

And will the new system# help or further hurt low-income borrowers?

DANIELLE DOUGLAS-GABRIEL:# I think that's debatable.

Certain features of the RAP plan,# there has been research that shows,## especially I think coming out of American# University, that some lower-income borrowers,## because of an interest subsidy that's attached# to the RAP plan where, if you make consistent## monthly payments on time, the government will pay# whatever unpaid interest is still accruing on the## loan, that could help some low-income# borrowers pay off their loans faster.

But there's also a great concern that,# because of the structure of the plan,## you could see a rise in defaults and delinquencies# for low-income borrowers who simply cannot## even keep up with the $10 payment, which is a# possibility and a reality for many Americans.

So it's difficult to say if# it's so much easier than what## has existed.

It is certainly not as# generous as what SAVE was offering,## which was much lower monthly payments and a# much faster path to forgiveness.

But this is## effectively the government trying to# split the difference to help people.

But we certainly could see a lot of people# repaying their loans for longer.

Keep in mind## that, under this new income-driven repayment plan,# it'll take 30 years of payments before you see the## remaining balance forgiven.

That's different# than the 20 or 25 years that currently exists,## and that's definitely different than# the decades' worth of payments that SAVE## was willing to let borrowers off for# them if they had low balances in total.

So this is not quite as generous as what# we have seen in the past.

In some ways,## it is very beneficial to some populations,# but it could be very detrimental to others## who have in the past and may continue to# struggle in repaying their student loans.

STEPHANIE SY: Quickly, Danielle, can you talk# about loan forgiveness and where that stands?

DANIELLE DOUGLAS-GABRIEL: It still exists for# certainly for public servants through public## service loan forgiveness.

The existing# income-driven repayment plants also have## a forgiveness feature that is still in play,# oftentimes after 20 or 25 years of repayment.

So that is still an option for borrowers, just not# quite as widespread as what we'd seen in the past.

STEPHANIE SY: That is Danielle Douglas-Gabriel# with The Washington Post joining us.

That was very helpful.

Thank you.

DANIELLE DOUGLAS-GABRIEL: You're welcome.