Student Loan Relief Is Shrinking — Here’s How 529 Plans Can Fill the Gap
Written by
Cindy Lamothe
Edited by
Amen Oyiboke
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Student loan relief once offered a bit of breathing room for borrowers — but that breathing room is shrinking fast.
As forgiveness programs scale back and eligibility rules tighten, families are finding it harder to count on help after the fact.
“Student loans, today they are also way harder to manage,” said Anna Baluch, finance expert at BestMoney.com. “Rules change all the time and families don’t have enough support, plus remaining in debt for years.”
Instead, more people are looking for proactive ways to manage education costs before debt piles up.
Enter 529 plans: an often-overlooked savings tool that’s gaining new relevance as student loan relief becomes less certain — and one that can help fill the gap.
Why Student Loans Feel Less Adaptable Than Ever
“People don’t really think that federal student loans are flexible in responding to their needs,” said Elizabeth Rivelli, personal finance expert at BestMoney. “After the 2025 one big beautiful bill, new borrowers.”
According to Rivelli, after the one big beautiful bill, previous helpful repayment plans are being left out.
One example is the SAVE Income Driven Plan, which she said stops accepting new borrowers after July 2026.
“The new borrowers will be placed into a different plan that has fewer options to lower payments or qualify for forgiveness. And this means that it will be easier for balances to keep growing with interest,” she said.
Graduate School Financing Is Getting Tighter
There are also fewer options for borrowing for graduate school, according to Rivelli.
“Federal loans and student federal loans for graduate students are maxed at $100,000 and PLUS loans are no longer available for them,” she said.
So this limits the options for families, which will be forced to pay out of pocket or take out private loans — which have higher interest rates.
Loan Forgiveness Is No Longer a Sure Thing
People can no longer depend on loan forgiveness, said Rivelli. “Public Service Loan Forgiveness, including nonprofit jobs, increasingly, and faces delays because of the lawsuits.”
She said we can expect that by 2028, the majority of borrowers will be forced into standard repayment plans with fixed payments, even if the income does not increase.
Also, interest will continue to add up during this time, making the debt repayment even more expensive.
“Fortunately, with a 529 plan, you avoid all the stress and uncertainty,” said Rivelli.
You can save money ahead of time and it grows tax-free, and you can use it for education without having to repay for it.
She said you can also cover all necessities like tuition, schools, apprenticeships and you can have up to $20,000 for K-12 costs.
“In some states, you can have your contribution that is up to $550,000 and $10,000 can be used for repaying student loans that already exist,” said Rivelli.
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