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Changes are coming to student loans and repayment options as a result of the One Big Beautiful Bill Act (OBBBA). Most of these changes will start on July 1, 2026.  

Undergraduate Loans

Available loan amounts may start to change

Parent PLUS Loans

New caps on Parent PLUS loans

Graduate and Professional Student Loans

Grad PLUS Loans eliminated 

Students enrolling in graduate programs after July 1, 2026 will no longer be able to borrow Graduate PLUS Loans. Under a legacy provision, current students enrolled in a graduate or professional program who borrowed any type of federal Direct Loan before July 1, 2026, can continue to borrow Graduate PLUS Loans for the remainder of their program or up to three academic years (whichever is shorter), provided they meet the eligibility requirements. 

New definitions and limits for Direct Unsubsidized Loans

The law introduces new terminology of “graduate students” and “professional students”. Graduate students can borrow up to $20,500 in Direct Unsubsidized Loans each year, with a lifetime borrowing cap of $100,000. Professional students are eligible to borrow up to $50,000 annually, with a lifetime maximum of $200,000. 

According to the regulations, professional programs of study include: Pharmacy (Pharm.D.), Dentistry (D.D.S. or D.M.D.), Veterinary Medicine (D.V.M.), Chiropractic (D.C. or D.C.M.), Law (L.L.B. or J.D.), Medicine (M.D.), Optometry (O.D.), Osteopathic Medicine (D.O.), Podiatry (D.P.M., D.P., or Pod.D.), Theology (M.Div., or M.H.L.), and Clinical Psychology (Psy.D. or Ph.D.).

Student Loan Repayment

There are changes for both new loans taken out after July 1, 2026, and for already borrowed loans.

For borrowers with a new loan taken out after July 1, 2026

For loans issued or consolidated on or after July 1, 2026, only two repayment options will be available instead of the multiple income-based repayment plans currently available. 

1. Tiered Standard Repayment Plan

   This plan will require fixed monthly payments over 10 to 25 years, depending on the total amount borrowed. Borrowers may choose to pay down their loan balances faster than the repayment term without facing pre-payment penalties.

2. Repayment Assistance Plan (RAP)

   This will be the only income-based repayment plan available to new borrowers. Payments will be determined based on the borrower’s adjusted gross income and family size. The minimum payment will be $10 per month for those with an annual income of under $10,000, and the maximum payment will be 10% of the adjusted gross income of $100,000 a year or more. A borrower’s monthly payment will be reduced by $50 per dependent child.
   
   Under RAP, borrowers will no longer see their loans grow while they are in repayment, as the government will waive any interest remaining after a borrower makes their monthly payment. For example, if a monthly payment is $50, but the borrower owes $75 in interest, the remaining $25 will be waived. Additionally, if a borrower’s monthly payment does not reduce their principal balance by at least $50, the government will contribute enough to ensure their principal decreases by $50.
   
   Borrowers enrolled in RAP will have their remaining student loans canceled after 30 years of payments. RAP will be the only repayment plan eligible for the Public Service Loan Forgiveness program.
    

For borrowers with loans taken out before July 1, 2026

A current borrower who takes on a new loan or consolidates their existing loans after July 1, 2026, will be treated as a new borrower and will only have access to the Standard Repayment Plan or the Repayment Assistance Plan.

Current borrowers with only loans taken out before July 1, 2026 will continue to have access to the Standard, Graduated, and Extended Repayment Plans. However, the income-based repayment plans SAVE, PAYE, and ICR will phase out by 2028. Borrowers will need to transition into either the current Income-Based Repayment (IBR) Plan, which is available solely to current borrowers, or the new Repayment Assistance Plan by July 1, 2028. Previously, borrowers had to demonstrate a “partial financial hardship” to access IBR. The new law has removed this requirement, making more current borrowers eligible for IBR.

For borrowers in the SAVE plan, multiple lawsuits have been filed regarding the plan, resulting in payments being paused until the lawsuits are resolved by the courts. However, the Trump Administration restarted accruing interest on these loans on August 1, 2025. Time spent in the SAVE plan does not count towards Public Service Loan Forgiveness (PSLF) or income-driven repayment (IDR) loan forgiveness or the program. SAVE participants can:

• Switch to another income-driven repayment plan (IBR, ICR, or PAYE) to make progress toward PSLF or IDR loan forgiveness. Information about these income-driven repayment plans can be found on the Department of Education website. 
• Stay on SAVE until either the lawsuits are decided or the borrower must move to IBR or RAP by July 1, 2028. However, interest will accrue, and time spent will not count towards PSLF or IDR loan forgiveness.

Other Changes to Student Loan Repayment

Deferment and forbearance are options for borrowers to temporarily pause their monthly student loan payments. Changes are coming to both as a result of the OBBBA. Starting July 1, 2027, borrowers will no longer have access to deferments for economic hardship or unemployment. Additionally, loans made on or after July 1, 2027 are eligible for forbearance for up to 9 months in any two-year period (borrowers are currently able to enter into forbearance for 12 months at a time). 

If borrowers are currently in default, they should research their options on the Department of Education’s website to determine the best course of action. Effective July 1, 2027, borrowers can rehabilitate their loans out of default twice, with a minimum monthly payment of $10 (currently, borrowers can only rehabilitate once).

What happens next?

After Congress passed the new law, the U.S. Department of Education established regulations to add details to how the new law will be implemented. These regulations were published for public comment in February and will be finalized before the law goes into effect July 1, 2026.

If you are a student looking to determine which repayment plans you’re eligible for, check out this tool: