New Federal Student Loan Changes You Need To Know

On July 1st, 2026, several new changes to federal student loan programs and repayment went into effect, affecting millions of Americans. These significant changes brought on by the One Big Beautiful Bill (OBBB), which President Trump signed into law on July 4th, 2025, have only now gone into effect. Whether you’re already in repayment or considering going back to school, here are the important changes you need to know. 

On July 1st, Graduate PLUS Loans (also known as Direct Grad Plus Loans) were eliminated unless a student has a qualifying exception. You can still take out a Grad PLUS loan as a graduate student if you meet these limited exceptions, which are:

• Was enrolled in a program of study at a school as of June 30, 2026;
• Borrowed a Direct Loan for that program of study prior to July 1, 2026;
• Are currently enrolled at the same school in the same program of study; and
• Haven’t had any break in your enrollment in the same program and the same school at any time as of July 1, 2026. (An approved leave of absence isn’t considered a break in your enrollment)

Completion, withdrawal, changing, or enrolling in a new graduate and/or professional program will make you ineligible for a Grad Plus Loan. 

On top of that, there are new limits to borrowing Grad PLUS Loans for new borrowers. Effective as of July 1st, 2026, new students in professional programs such as medicine and law can borrow up to $50,000 a year with an aggregate borrowing limit of $200,000. Students in other graduate programs can borrow up to $20,500 a year with an aggregate borrowing limit of $100,000. This is a change from the previous rule, which allowed borrowers to take loans up to the full cost of attendance for the program. For important definitions of professional and graduate programs, consult this updated guide from the Department of Education.

It’s important to note that the new loan limits do not apply to existing Grad Plus Loan borrowers.

Loan limits and terms for undergraduate students, including subsidized and unsubsidized loans, have remained largely unchanged, but Parent PLUS Loans have capped limits. As of July 1st, 2026, parents can borrow up to $20,000 a year per undergraduate student with a lifetime borrowing limit of $65,000 per undergraduate student. For more guidance about Parent PLUS Loan eligibility, visit this page on the Department of Education.

One of the most critical changes outlined in the OBBB is the loan repayment plans. On March 10th, 2026, the SAVE Plan was eliminated, forcing borrowers on this plan to switch to a new plan. Borrowers on the SAVE Plan have a 90-day window to switch their plan to another repayment option once they get their notice from their loan servicer, but it’s possible to switch to another plan earlier if you wish. If the switch isn’t completed within the 90-day window, borrowers on the SAVE Plan will automatically be enrolled in the Standard Plan.

Any new loans disbursed after July 1st, 2026, will only have two income-driven repayment (IDR) plans. These plans are:

• Repayment Assistance Program (RAP)
• Tiered Standard Plan

For borrowers with loans disbursed before July 1st, 2026, other income-driven repayment plans are still available to you, such as IBR, graduated, and extended repayment plans. Other repayment plans, such as PAYE and ICR, are still available depending on your loan terms, but will be phased out on July 1st, 2028. 

If you’re in the process of applying for or working towards Public Student Loan Forgiveness (PSLF), there have been no changes made to that program currently.