What will change for student loans in 2026?

Starting July 1, 2026, the federal student loan system will enter a new era.

A wide range of federal policy changes will reshape how families and graduate students borrow for college starting in 2026. The legislation, passed this summer, eliminates some long-standing loan programs and replaces them with caps and new repayment plans.

While the reforms aim to contain debt growth and improve accountability for colleges, they also represent a clear shift away from the flexible borrowing model that has defined federal student aid for years.

Result: Fewer borrowing options, tighter limits, and new trade-offs for both students and parents.

What changes for borrowers?

For borrowers take out New loans after July 1, 2026Federal lending rules will look very different. While college loan limits remain the same (including access to subsidized and unsubsidized loans), parents will face new limits.

Parents: For families, the most dramatic change will be to Parent PLUS loans, which will now carry a $20,000 annually and The lifetime maximum is $65,000 Each child has a dependent. The limit is fixed per student – paying off loans or qualifying for forgiveness will not restore eligibility. A A grace period of three years Parents who borrowed before June 30, 2026, are allowed to continue under the old rules until 2029.

Parent PLUS borrowers will also not have access to income-based repayment, which could make repayment more difficult and frankly make them a worse option than private student loans.

Graduate students: The Grad PLUS loan program was eliminated, ending open borrowing for graduate programs. In its place, graduate students will be limited to $20,500 per year and $100,000 in total Under the new unsubsidized Direct Stafford Loans. Vocational school students (including those pursuing law or medicine) will have higher limits: $50,000 annually and Total $200,000.

Students already enrolled in a program who took out at least one loan before June 30, 2026, will be allowed to continue borrowing under the old rules for the remainder of their program or up to three years, whichever is shorter.

New payment plan changes

Borrowers who take out new loans after July 1, 2026, will have only two repayment options: the Standard Repayment Plan and the new Repayment Assistance Plan (RAP).

Standard payment plan:

Payments are determined based on the borrower’s loan balance.

• Less than $25,000: 10-year term
• $25,000 – $50,000: 15 years
• $50,000 – $100,000: 20 years
• More than $100,000: 25 years

This structure replaces the old multiple repayment options and is similar to the “stretch repayment” plans previously used for larger balances.

Repayment Assistance Plan (RAP):

RAP payments are based on adjusted gross income (AGI), starting at just $10 per month for borrowers who earn less than $10,000 per year. Payment rates increase with income (from 1% of general gross income for those earning $10,001-$20,000 up to 10% for income over $100,000).

Borrowers get a $50 per dependent Deducted from their monthly payment, although payments cannot be less than $10. Any unpaid interest will be waived, preventing the balance from growing. After 30 years of payments, any remaining balance will be forgiven.

Parent PLUS borrowers are not eligible for RAP. Their only option will be the standard payment plan.

Existing borrowers will still be able to access their standard ‘legacy’ plans and IBR, but can also sign up for RAP.

How will these changes affect borrowers?

For families, the 2026 changes could change how families pay for college. As federal borrowing limits decline, some students (especially in high-cost graduate or professional programs) may turn to private student loans, which often require qualifying credit scores and lack federal protections.

Parents who borrow through the PLUS program may need to adjust their borrowing expectations, and consider private loans versus Parent PLUS loans.

At the same time, a simplified payment system can reduce confusion but extend payment timelines. A 30-year RAP offers smaller monthly payments but may have higher total costs over time. Compared with existing plans, RAP may be cheaper than IBR for low-income borrowers, but is likely more expensive for families earning more than $100,000 per year.

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