Student Loan Changes in 2026: What Every Borrower Should Know

The federal student loan system is in the midst of a major overhaul, with changes ranging from revised borrowing limits to new repayment plans and the elimination of the PLUS loan program for graduate students.

Many of these changes take effect with the 2026-27 school year. Others are being phased in through 2028. Here's a breakdown of what's changing, what's next, and what it means for borrowers.

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What changed for student loans in 2026?

Here’s a breakdown of the most significant changes and their effective dates.

What is the ‘One Big Beautiful Bill Act?’

The “One Big Beautiful Bill Act” is a tax and spending law that included the changes in federal financial aid policy.

Proponents of the legislation passed in 2025 said it would curb excessive borrowing, simplify repayment, and reduce the government's lending costs. To this end, it put new limits on student loans, ended the grad PLUS loan program, and created two new student loan repayment plans, among other student loan changes. 

Those who opposed the bill argued that it would create funding gaps for low-income students who rely on federal loans to pay for higher education. Some also said the new Repayment Assistance Plan will burden borrowers with higher monthly payments and extra time in debt compared to the other income-driven repayment options. 

Many of the policy changes took effect on July 1, 2026, and apply to anyone who takes out a student loan on or after that date. If you borrowed prior to July 1, you can generally continue borrowing under the old rules for three more years or until your program ends, whichever comes first.

“Nearly all student loan borrowers will be impacted in some way by the changes that started going into effect on July 1,” says student loan lawyer Adam Minsky. 

RAP and the Tiered Standard Plan

Two new federal student repayment plans are available starting in the 2026-27 school year: an income-driven plan called the Repayment Assistance Plan and a Tiered Standard Plan. 

“If you borrow a loan after July 1, your repayment plan options will be very different than the past,” says Robert Farrington, Founder of The College Investor. “Families should run the repayment plan numbers to know exactly what their future payments will look like before borrowing.”

Here's how the two new plans work. 

How the Repayment Assistance Plan works

RAP sets your monthly student loan payments to 1% to 10% of your adjusted gross income (the number that appears on your tax return after subtracting deductions from your total earnings), divided by 12, minus $50 per dependent. If you make less than $10,000 per year, you'll make a monthly payment of $10.

Other income-driven plans based your monthly payment on your discretionary income, rather than your adjusted gross income, which can result in a lower monthly payment. However, with RAP, the government will waive excess interest that your monthly payment doesn't cover. And if your payment doesn't reduce your principal by at least $50, the government will provide a subsidy to make sure it drops by $50 each month.

The RAP plan extends your loan terms to 30 years and forgives any remaining balance at the end of your term. By contrast, the other income-driven plans offer forgiveness after 20 or 25 years. If you're pursuing Public Service Loan Forgiveness (PSLF), your payments on the RAP plan will qualify. 

How the new Tiered Standard Plan works

The new Tiered Standard Plan adjusts your repayment timeline based on your loan balance. Here's how it works:

Here's a quick comparison between the new RAP and Tiered Standard Plan for student loans:

RAP may be the better fit if you're looking for lower monthly payments or are pursuing PSLF. The Tiered Standard Plan could be preferable if you're looking to pay off your student loans in a shorter amount of time. 

What student borrowers in other repayment plans need to know

If you're in another income-driven plan, you may need to switch soon. Here are your options by plan:

• Income-Based Repayment: This plan will stick around, so you don't have to switch if you don't want to. 
• SAVE: With the SAVE Plan ending, you have 90 days from when you receive notification from your loan servicer to change or be auto-enrolled in a different plan. 
• PAYE and Income-Contingent Repayment: These plans will be phased out by July 1, 2028. You can stay in them for now but will eventually need to move to a different plan.

Note that parent PLUS loans aren't eligible for the new RAP plan. If you didn't consolidate your parent loans by June 30, 2026, you no longer have access to any income-driven repayment option. 

What is happening to SAVE, PAYE, and ICR?

The SAVE plan has been eliminated, and PAYE and ICR will be phased out completely after July 1, 2028. If you were on SAVE, you'll have a 90-day window to switch to a different plan and can expect to resume payments soon. 

PAYE and ICR borrowers can stay put for now, but plan to switch to a different repayment option by July 1, 2028. 

Changes to grad PLUS loans

Grad PLUS loans, introduced in 2006, have been eliminated for new borrowers and are being phased out completely by 2028. The program let qualifying graduate students borrow up to their school's cost of attendance, minus other financial aid they received. 

Graduate and professional student loan borrowing caps

As of July 1, 2026, new graduate borrowers are facing revised borrowing caps for Direct Unsubsidized Loans. Students in professional programs have a higher limit, while those in general graduate programs have a lower limit.

Here are the student loan borrowing limits for 2026 and beyond.

• Professional students: Can borrow up to $50,000 per year with a lifetime limit of $200,000  
• Graduate students: Can borrow up to $20,500 per year with a lifetime limit of $100,000

As of July 2026, the definition of professional programs was in flux due to a court order, which caused the Department of Education to temporarily expand the list from 11 programs to 29. Some examples of professional programs include medical school, dental school, and law school.

The new overall lifetime borrowing limit

New borrowers also face an overall lifetime borrowing limit of $257,500, including loans borrowed for undergraduate education. If you already borrowed a significant amount as a college student, you may face lower caps as a graduate student.

What is the grad PLUS legacy provision?

If you already took out federal student loans to fund your graduate degree program before July 1, 2026, you're considered a legacy borrower. That means you can keep using grad PLUS loans under the old rules for three more years or until your program ends, whichever comes first.

Changes to parent PLUS loans

The parent PLUS loan program has changed too. There are new caps on borrowing, and parent PLUS loans disbursed after July 1, 2026, are only eligible for a single repayment plan option, the Tiered Standard Plan.

New parent PLUS loan borrowing caps

Previously, parents could use PLUS loans to borrow up to their child’s full cost of attendance, minus other financial aid received. Now, parent borrowers are limited to $20,000 per year per student, with a total limit of $65,000 per student. 

What is the parent PLUS legacy provision?

Existing parent PLUS borrowers have a similar legacy provision as graduate students. If you took out a parent PLUS loan before July 1, 2026, you can keep borrowing under the old rules for three more years or until your student graduates or leaves their program, whichever comes first.

How loan forgiveness is affected by 2026 student loan changes

The 2026 student loan changes may impact your journey toward loan forgiveness. Here are a few ways you may be affected:

• SAVE Plan forgiveness is no longer available: The SAVE Plan offered a faster path to loan forgiveness for many borrowers, but the plan has been struck down. 
• RAP has a longer timeline to forgiveness: RAP spans 30 years, while other income-driven plans span 20 or 25 years. 
• There are fewer qualifying plans for PSLF: The PSLF program requires 10 years of public service and 120 payments on an income-driven plan. Since ICR and PAYE will be eliminated in a couple years, you may have to switch to IBR or RAP to keep making qualifying payments. 
• Access to PSLF for parent borrowers is limited: New parent PLUS loans no longer have access to income-driven repayment, so they're locked out of a pathway to PSLF. 

Deferment and forbearance changes coming in 2027 

Deferment and forbearance can temporarily postpone your student loan payments if you're experiencing financial hardship, but the rules will change on July 1, 2027. The changes include: 

• No more deferment for economic hardship or unemployment 
• New cap on forbearance of nine months within any 24-month period (down from the current limit of 12 months at a time for a maximum of three years) 

These restrictions apply to new loans disbursed on or after July 1, 2027. 

Pell Grant changes 

Pell Grants offer funding to undergraduate students with exceptional financial need, but the program underwent some changes on July 1, 2026. Here are some of the most significant ones: 

• Students who receive outside aid that fully covers their cost of attendance or whose Student Aid Index (SAI) is equal to or greater than twice the Pell Grant amount (SAI ≥ $14,790 for 2026-27, based on the $7,395 maximum award) are no longer eligible.
• Foreign income will be included when the FAFSA calculates your financial need.  
• Certain workforce programs that span eight to 15 weeks are now eligible for Workforce Pell Grants.

Students should make it a priority to submit the FAFSA each year so they can access any financial aid they're eligible for. 

What student loan borrowers should do now 

The impact of these student loan changes largely depends on whether you borrowed for the first time before or after July 1, 2026. 

If you're a legacy borrower, you can generally stick to the old rules and repayment plans, but only for a limited time. Certain actions could cause you to lose this legacy status, like transferring schools, changing programs, or taking out new loans. 

“Existing borrowers should be mindful that borrowing a new loan or consolidating their existing loans will limit their repayment plan options to just RAP or Tiered Standard,” says Farrington. 

Anyone on the SAVE Plan should review alternative repayment plans and choose the best one for you. The federal Repayment Calculator tool can help you compare monthly payments and overall borrowing costs across different plans. 

For those planning to borrow after July 1, 2026, review the new borrowing limits, loan programs, and repayment plans available to you. With the new caps, some students, especially those pursuing graduate school, may need alternative financing options to fully cover their cost of attendance. 

“Carefully evaluate your financing options and your repayment options, and plan ahead so that you know what you may qualify for,” says Minsky.

Other sources of funding may include scholarships, grants, income from part-time work, and employer assistance programs. After you've gone through your other options, you might also consider a private student loan to cover your remaining costs. 

If you're considering refinancing federal loans

As federal student loan programs become less flexible, some borrowers may find private refinancing more appealing. Refinancing involves replacing your current loans with a new loan, potentially at a lower interest rate. 

But refinancing federal loans means losing eligibility for any federal repayment plans, forgiveness options, or other protections. If you're considering refinancing, make sure you've weighed the potential savings against the loss of federal benefits.