- Graduate PLUS loans will no longer be available to new borrowers beginning July 1, 2026.
- Parents and graduate students will face new federal borrowing limits that could leave larger funding gaps.
- The Repayment Assistance Plan (RAP) will replace today’s income-based options for future loans, while the Savings Plan (SAVE) will expire.
Federal student loans are a critical component of how families pay for college.
Starting in 2026, new laws will change how much students and parents can borrow and how those student loans are repaid. The changes are big, especially for graduate students, professional programs, and families who rely on Parent PLUS loans to fill college funding gaps.
Student loan repayment is also facing one of the biggest shifts in history.
For families planning to attend college or graduate school, or those already paying off student loans, next year will be another wild year with updates and changes.
1. Grad PLUS loans expire
For years, Graduate PLUS loans have allowed graduate students and professionals to borrow up to their full cost of attendance, covering tuition, fees, housing, and living expenses after other aid has been applied.
This option ends for new borrowers after that July 1, 2026.
What changes?
Graduate PLUS loans will no longer be issued to students who receive their first federal loan for graduate school on or after that date. Students who already received Grad PLUS loans for their program of study may be allowed to continue borrowing within the current limits for up to three years, but new students in graduate programs will not have access.
Why does this happen?
The One Big Beautiful Bill ended the Grad PLUS loan program, with lawmakers expressing concern about unlimited borrowing. Graduate students, despite having fewer borrowers, have a much higher average balance.
The Grad PLUS borrowing termination places a strict limit on the amount graduate students can finance with federal student loans.
How it affects you
Students attending law school, medical school, MBA programs, and other high-cost graduate programs may not be able to borrow enough through federal loans alone to cover total costs.
This deficiency may need to be filled by:
What are you planning now?
Prospective graduate students should review the full cost of the programs they are considering and compare it to the new federal student loan limits.
2. Parent Plus loans will have new limits
Parent PLUS loans have long been a college finance boost, allowing parents to borrow up to the full cost of attendance for their child’s education.
This too is changing.
What changes?
New Parent PLUS loans issued after July 1, 2026 will be capped at:
- $20,000 annually per student
- Total $65,000 per student
Previously, parents could borrow the full amount of the cost of attendance, minus other financial aid received.
Why does this happen?
Excessive parental borrowing has grown steadily, and policymakers have expressed concern about parents taking on large balances near retirement, sometimes with limited ability to repay.
The new caps were passed as part of the One Big Beautiful Bill Act, which also changed the repayment option for future Parent PLUS loans as well.
How does this affect families?
Families who rely heavily on Parent PLUS loans to cover the costs of private college, out-of-state public universities, or high-cost programs may face significant financing gaps.
The change may affect:
What are you planning now?
Parents of middle and high school students should reconsider their college savings plans and anticipated borrowing strategies. Families may need:
Parents with existing PLUS loans should also monitor consolidation and repayment timelines, as access to income-based repayment options depends on when the loans are consolidated.
3. New borrowing limits for graduate students and professionals
With the end of Grad PLUS loans comes a new maximum structure for graduate and professional education loans.
There will now be new borrowing limits for both postgraduate programs and professional schools – the first time the government has differentiated in borrowing limits for each programme.
What changes?
Unsubsidized Federal Direct Loans will still be available, but with stricter limits:
Why does this happen?
This change is designed to replace open borrowing with strict restrictions, similar to how college loans work.
How does it affect students?
Graduate students in lower-cost programs may see little difference. Those in expensive career paths may need to find tens of thousands of dollars elsewhere.
Programs with high tuition fees but modest earnings after graduation may become more difficult to justify financially under the new rules. Private lenders also may not substitute federal student loans for certain degrees.
What are you planning now?
Applicants should compare projected debt to realistic earnings results in their field. Graduate school decisions will need to be very informed Focus on return on investment (ROI)..
4. Launching the Repayment Assistance Plan (RAP).
Borrowing rules are only half the story. Payment plans are changing, too.
What changes?
For loans disbursed on or after July 1, 2026, most income-driven repayment plans will be replaced with a new plan. Payment assistance planOr rap.
Borrowers will generally choose between:
It’s important to note that borrowers with new Parent PLUS loans after July 1, 2026 will only have access to the Standard plan.
Why does this happen?
The federal reimbursement system has become complex, with many overlapping income-based plans. The resettlement program aims to simplify repayment – but not necessarily make it cheaper.
How does this affect borrowers?
Payments under the resettlement program will be linked to income, but timelines for relief are longer than under recent plans. Monthly payments for some borrowers may rise over time, especially as income increases.
However, the resettlement program is compelling, because it provides interest subsidies and principal reduction assistance.
What are you planning now?
Students who expect to rely on income-driven repayment should pay close attention to when their loans are disbursed. Loans disbursed before June 30, 2026 will still retain access to income-based repayment (IBR).
5. The conservation plan is about to be completed
The Value Education Savings Plan, or Thrift Plan, was a Biden-era initiative that left more than 7 million borrowers in limbo. While the court system and OBBBA have killed the SAVE plan, the final timelines for SAVE remain uncertain.
What is certain is that SAVE borrowers need to make decisions and plan to change their repayment plans this year.
What changes?
SAVE is closed to new borrowers and borrowers on the SAVE scheme must decide on IBR today, or wait for the RRP in July. It’s possible the Department of Education could force borrowers to create a new plan on their own schedule — which may not be helpful for those waiting in limbo.
Why does this happen?
SAVE was created under the previous executive and faced legal and legislative challenges. This was challenged in court and was overturned by law.
How does this affect borrowers?
Borrowers currently on SAVE should run their numbers using a college investor’s RAP calculator or student loan calculator to determine:
- Potential payment under IBR
- Potential payment under RAP
- Potential payment for the standard plan
Based on these numbers, borrowers can decide which repayment plan suits them best. Borrowers seeking Public Service Loan Forgiveness are likely to change sooner rather than later to continue making progress.
What are you planning now?
Borrowers should log into their loan servicer and ensure their contact information is up to date. This will ensure that you do not miss any important timelines or deadlines.
What borrowers and families can do now
The most important step is early planning. The rules that apply to your loans will depend largely on When you borrowAnd what type of student loan you have.
Families want:
- Review your college and graduate school schedules carefully
- Compare total program costs with new loan limits
- Increase savings or look for scholarships earlier
- Ask financial aid offices how to change funding packages
Existing borrowers need to run the numbers on their repayment plans and understand the changes.
The federal student loan system in 2026 will be more limited, more regulated, and less forgiving toward future borrowers. Families who understand these shifts now will be better positioned to avoid surprises later and make educational decisions consistent with long-term financial stability.
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