- Graduate and Parent Loans PLUS face new borrowing limits in 2026.
- A new repayment plan, known as RAP, will launch in July 2026, while older income-based plans begin to phase out.
- Repayment protections for future borrowers are tightened, including deferment and forbearance limits starting in 2027.
Starting in 2026, the federal student loan system begins a comprehensive, multi-year overhaul that will reshape how students and families borrow for college and how they repay afterward. The changes arrive in phases through 2028, directly impacting graduate students, parents and future borrowers.
Some long-standing programs are disappearing, new loan limits are taking effect, and repayment protections are tightening for borrowers who take out loans later this decade.
Here’s what borrowers need to know when they plan to borrow and repay their student loans over the next two years.
June 30, 2026: End of Grad PLUS loans
Graduate PLUS loans, which graduate students and professionals have long used to cover costs that exceed the limits of standard federal loans, will stop being issued to new borrowers after June 30, 2026. Existing borrowers have a three-year grace period to continue their program of study, but new graduate students will no longer have access to the program. Instead, they will need to use Direct Graduate School Loans (a different federal student loan program).
This represents a major shift. Grad PLUS loans allowed students in medical, legal, and other professional programs to borrow up to their full cost of attendance, often resulting in six-figure balances. Without this option, students would need to rely on capped federal loans, institutional aid, or private student loans.
Schools may respond by adjusting prices, but students entering graduate programs after this date should expect more restrictive federal restrictions.
July 1, 2026: RAP begins
On July 1, 2026, a new federal repayment option called the Repayment Assistance Plan (RAP) will take effect. The RRP is designed to replace multiple income-based repayment plans over time, creating a single framework for new borrowers.
RAP replaces the complex discretionary income formula with the basic adjusted gross income formula to calculate the monthly payment. It also has two notable features: no negative amortization, and a principal reduction subsidy of $50 per month if you don’t reduce your monthly payment of principal by $50.
The RAP will be the only income-based repayment plan available to borrowers who take out new loans on or after July 1, 2026. Existing borrowers will still be able to access IBR.
July 1, 2026: New loan limits for graduate and professional students
Also from 1 July 2026, new borrowing limits will come into effect for graduate and professional students. These limits replace open borrowing once enabled through Grad PLUS Loans.
Notably, this is the first time that student loan limits have depended on the type of program, with different loan limits for graduate or professional students.
Students in high-cost graduate programs may face funding gaps that did not exist in previous cohorts.
This change places more responsibility on families and students to evaluate program costs, expected earnings, and alternative financing before enrolling.
July 1, 2026: New loan limits for original plus loans
Parents who borrow through the Parent PLUS program will also face new limits starting July 1, 2026. Like Grad PLUS, Parent PLUS loans have historically allowed borrowing up to the full cost of attendance minus other aid.
Under the new rules, annual and lifetime caps will apply. Parents will be able to borrow up to $20,000 per year, or $65,000 over the life of each student.
Families accustomed to filling college cost gaps with Parent PLUS loans may need to reevaluate their college options, savings strategies, or payment plans offered directly by institutions. Private loans will become more attractive than Parent PLUS loans for many families.
In addition to the new caps, new Parent PLUS loan borrowers also face tougher repayment plan options — they can only access the new Standard plan. It also means there will be no more access to Public Service Loan Forgiveness.
July 1, 2027: Tightening deferment and forbearance rules for new borrowers
Beginning July 1, 2027, new federal student loan borrowers will lose access to the Economic Hardship Deferral and Unemployment Deferral. These options have traditionally allowed borrowers to pause payments during financial stress without entering default.
For these new borrowers, forgiveness will still exist but with more stringent restrictions. The total tolerance ceiling will be set at Nine months during any 24-month period.
The goal is for students to enroll in an income-driven repayment plan rather than forgiveness.
Borrowers with older loans are generally not affected, but anyone taking out new loans after that date should plan for fewer safety nets.
Late 2027 to early 2028: PAYE and ICR enrollment discontinued
In late 2027 or early 2028, enrollment in two long-term income-based repayment plans will close: Income-Based Repayment (PAYE) and Income-Based Repayment (ICR). That’s according to a source at student loan servicers who was part of the initial logistical talks.
Borrowers already enrolled may be allowed to stay until they migrate to IBR or RAP, but any new borrowers will not be able to choose these plans.
Borrowers in these plans need to plan for their eventual transition to another repayment plan.
30 June 2028: PAYE and ICR officially end
On June 30, 2028, PAYE and ICR officially expire as federal reimbursement programs. After that point, they will no longer exist within the federal loan system. The only repayment plan option for borrowers with loans before June 30, 2026 will be IBR and RAP.
This latest phase completes a transition away from the patchwork of payment plans that have been in place over the past three decades.
What this means for student loan borrowers
The 2026-2028 timeline creates a clear dividing line between “old” and “new” borrowers. Students who borrow before July 2026 retain access to more generous loan limits and repayment protection. Those who then borrow face tougher rules but a more standardized system.
Families planning to attend college should pay close attention to enrollment dates, years of borrowing, and total costs. Graduate students and professionals, in particular, may want to compare starting before and after key deadline dates.
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