Key Points
- Graduate PLUS loans will no longer be available to new borrowers starting July 1, 2026.
- Parents and graduate students will face new federal borrowing caps that may leave larger funding gaps.
- The Repayment Assistance Plan (RAP) will replace today’s income-driven options for future loans, while the SAVE plan is ending.
Federal student loans are a critical component in how families pay for college.
Beginning in 2026, new laws will change how much students and parents can borrow and how those student loans are repaid. The changes are significant, especially for graduate students, professional programs, and families that rely on Parent PLUS loans to close college funding gaps.
Student loan repayment also faces one of the biggest shifts in history.
For families planning for college or graduate school, or those already in repayment on student loans, the next year will be another wild one with updates and changes.
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1. Grad PLUS Loans Are Ending
For years, Graduate PLUS loans have allowed graduate and professional students to borrow up to the full cost of attendance, covering tuition, fees, housing, and living expenses after other aid is applied.
That option ends for new borrowers after July 1, 2026.
What’s changing
Graduate PLUS loans will no longer be issued to students who take out their first federal loan for graduate school on or after that date. Students who already have Grad PLUS loans for their program of study may be allowed to continue borrowing under existing limits for up to three years, but new students to graduate programs will not have access.
Why it’s happening
The One Big Beautiful Bill Act ended the Grad PLUS loan program, as lawmakers have expressed concern about unlimited borrowing. Graduate students, while being a lower number of borrowers, have a significantly higher average balance.
Ending Grad PLUS borrowing places a hard limit on how much graduate students can finance through federal student loans.
How it affects you
Students entering law school, medical school, MBA programs, and other high-cost graduate programs may no longer be able to borrow enough through federal loans alone to cover total costs.
That shortfall may need to be filled through:
- Scholarships or fellowships
- Employer tuition benefits
- Personal savings
- Private student loans
What to plan now
Prospective graduate students should review the full cost of 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 the backstop of college financing, allowing parents to borrow up to the full cost of attendance for their child’s education.
That, too, is changing.
What’s changing
New Parent PLUS loans issued after July 1, 2026 will be capped at:
- $20,000 per year per student
- $65,000 total per student
Previously, parents could borrow the entire amount of the cost of attendance, minus other financial aid received.
Why it’s happening
Parent PLUS borrowing has grown steadily, and policymakers have expressed concern about parents taking on large balances close to 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 it affects families
Families that rely heavily on Parent PLUS loans to afford private colleges, out-of-state public universities, or high-cost programs may face meaningful funding gaps.
The change may influence:
- College selection decisions
- Whether students live on or off campus
- How costs are split between parents and students
What to plan now
Parents of middle- and high-school students should revisit college savings plans and expected borrowing strategies. Families may need to:
- Increase savings where possible
- Compare in-state and lower-cost options more carefully
- Ask colleges about institutional grants and tuition payment plans
- Run The College Investor's How Much Student Loan Debt Can I Afford Calculator
Parents with existing PLUS loans should also monitor consolidation and repayment timelines, as access to income-based repayment options depend on when loans are consolidated.
3. New Borrowing Limits For Graduate And Professional Students
With the end of Grad PLUS loans comes a new structure of loan caps for graduate and professional education.
There will now be new borrowing limits for both graduate school and professional school programs - the first time the government has ever made the distinction in borrowing limits per program.
What’s changing
Federal Direct Unsubsidized Loans will remain available, but with stricter limits:
- $20,500 per year and $100,000 lifetime for graduate programs
- $50,000 per year and $200,000 lifetime for professional programs
Why it’s happening
This change is designed to replace open-ended borrowing with strict limits, similar to how undergraduate loans operate.
How it affects students
Graduate students in lower-cost programs may see little difference. Those in expensive professional tracks may need to find tens of thousands of dollars elsewhere.
Programs with high tuition but modest post-graduation earnings may become harder to justify financially under the new rules. Private lenders may also NOT replace federal student loans for some degrees.
What to plan now
Applicants should compare expected debt to realistic earnings outcomes in their field. Graduate school decisions will need to be extremely Return on Investment (ROI) focused.
4. The Repayment Assistance Plan (RAP) Launches
Borrowing rules are only half the story. Repayment plans are changing too.
What’s changing
For loans disbursed on or after July 1, 2026, most existing income-driven repayment plans will be replaced by a new Repayment Assistance Plan, or RAP.
Borrowers will generally choose between:
- A standard fixed repayment plan
- The new RAP option
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 it’s happening
The federal repayment system has grown complex, with multiple income-driven plans overlapping. RAP is intended to simplify repayment — though not necessarily make it cheaper.
How it affects borrowers
Payments under RAP will be tied to income, but forgiveness timelines are longer than under recent plans. Monthly payments for some borrowers may rise over time, particularly as income increases.
RAP is compelling, though, because it offers interest subsidies and principal reduction assistance.
What to plan 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 maintain access to Income Based Repayment (IBR).
5. The SAVE Plan Is Ending
The Saving on a Valuable Education, or SAVE plan, was a Biden-era initiative that has left over 7 million borrowers in limbo. While the court system and OBBBA both have killed the SAVE Plan, the final SAVE Timelines are still uncertain.
What is certain is that borrowers in the SAVE plan need to be making decisions and planning to change repayment plans this year.
What’s changing
SAVE is closed to new borrowers and those in the SAVE plan need to decide on either IBR today, or wait for RAP in July. It's possible the Department of Education will force borrowers into a new plan on their own timeline - which may not be beneficial for those waiting in limbo.
Why it’s happening
SAVE was created under earlier executive authority and has faced legal and legislative challenges. This was challenged in court, and also eliminated by law.
How it affects borrowers
Borrowers currently on SAVE should run their numbers using The College Investor's RAP Calculator or Student Loan Calculator to determine:
- Potential payment under IBR
- Potential payment under RAP
- Potential standard plan payment
Based on those numbers, borrowers can decide which repayment plan would work best for them. Borrowers pursuing Public Service Loan Forgiveness should likely change sooner, rather than later, to continue making forward progress.
What to plan now
Borrowers should login to their loan servicer and ensure their contact information is updated. This will ensure they don't 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 heavily on when you borrow, and what type of student loan you have.
Households want to:
- Review college and graduate school timelines carefully
- Compare total program costs against new loan limits
- Increase savings or seek scholarships earlier
- Ask financial aid offices how funding packages may change
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 structured, and less forgiving for future borrowers. Families who understand those shifts now will be better positioned to avoid surprises later and to make education decisions that align with long-term financial stability.
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Editor: Colin Graves
Robert Farrington is the founder of The College Investor and is widely recognized as one of the nation’s leading voices on student loan debt and saving for college. He holds an MBA from UC San Diego Rady School of Management and has spent over 15 years researching, writing, and advising on student loans, 529 plans, financial aid programs, and saving and investing for young professionals.
Robert has been featured in the The New York Times, The Wall Street Journal, The Washington Post, NBC News, and Forbes, where he has been a regular personal finance contributor for over a decade. His work combines both professional expertise and personal experience – he successfully navigated his own student loan repayment journey and has helped thousands of readers do the same.
He is committed to making the intersection of personal finance and education transparent and accessible. You can learn more about Robert on the About Page or on his personal site RobertFarrington.com.