Key Points
- Graduate and Parent PLUS loans face new borrowing limits in 2026.
- A new repayment plan, known as RAP, launches in July 2026, while older income-driven plans begin a phase out.
- Repayment protections narrow for future borrowers, including limits on deferment and forbearance starting in 2027.
Starting in 2026, the federal student loan system begins a multi-year overhaul that will reshape how students and families borrow for college and how repayment works afterward. The changes arrive in stages through 2028, affecting graduate students, parents, and future borrowers most directly.
Some long-standing programs disappear, new loan limits take effect, and repayment protections narrow for borrowers who take out loans later in the decade.
Here's what borrowers need to know as they plan both borrowing and student loan repayment over the next two years.
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June 30, 2026: Grad PLUS Loans End
Graduate PLUS loans, long used by graduate and professional students to cover costs beyond standard federal loan caps, will stop issuing 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 access the program. Instead, they will need to use Direct Graduate School Loans (a different federal student loan program).
This marks a significant shift. Grad PLUS loans have allowed students in medical, law, and other professional programs to borrow up to the full cost of attendance, often resulting in six-figure balances. Without this option, students will 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 constrained federal borrowing.
July 1, 2026: RAP Begins
On July 1, 2026, a new federal repayment option called the Repayment Assistance Plan (RAP) goes into effect. RAP is designed to replace several existing income-driven repayment plans over time, creating a single framework for new borrowers.
RAP replaces a complex discretionary income formula with a basic adjusted gross income formula for calculating the monthly payment. It also has two notable features: no negative amortization, and a $50/mo principal reduction subsidy if your monthly payment doesn't reduce the principal by $50.
RAP will be the only income-driven repayment plan available to borrowers taking out new loans on or after July 1, 2026. Existing borrowers will still have access to IBR.
July 1, 2026: New Loan Limits for Graduate and Professional Students
Also effective July 1, 2026, new borrowing caps take effect for graduate and professional students. These limits replace the open-ended borrowing once enabled by Grad PLUS loans.
Notably, this is the first time that student loan limits will be based on program type, with different loan limits or graduate students vs. professional students.
Students in high-cost graduate programs may face funding gaps that did not exist for earlier 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 Parent PLUS Loans
Parents borrowing through the Parent PLUS program will also face new limits starting July 1, 2026. Like Grad PLUS, Parent PLUS loans 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, of $65,000 lifetime, per student.
Families accustomed to filling college cost gaps with Parent PLUS loans may need to reassess college choices, savings strategies, or payment plans offered directly by institutions. Private loans will become more attractive than Parent PLUS loans for many families.
Beyond the new caps, new Parent PLUS loan borrowers also face stricter repayment plan options - only having access to the new Standard Plan. This also means there will be no more access to Public Service Loan Forgiveness.
July 1, 2027: Deferment and Forbearance Rules Tighten for New Borrowers
Beginning July 1, 2027, new federal student loan borrowers will lose access to economic hardship deferment and unemployment deferment. These options have traditionally allowed borrowers to pause payments during financial stress without entering default.
For these new borrowers, forbearance will still exist but with tighter constraints. Total forbearance will be capped at nine months within any 24-month period.
The goal is for students to enroll in an income driven repayment plan instead of going into forbearance.
Borrowers with older loans are generally not affected, but anyone taking out new loans after this date should plan for fewer safety nets.
Late 2027 to Early 2028: Enrollment Stops for PAYE and ICR
In late 2027 or early 2028, enrollment will close for two long-standing income-driven repayment plans: Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR). This is according to a source at the student loan servicers who's been a part of the initial logistical conversations.
Borrowers already enrolled may be allowed to stay until they migrate to IBR or RAP, but no new borrowers will be able to choose these plans.
Borrowers in these plans need to plan for their eventual migration to another repayment plan.
June 30, 2028: PAYE and ICR Officially End
On June 30, 2028, PAYE and ICR formally end as federal repayment programs. After this point, they will no longer exist within the federal loan system. The only repayment plan option for borrowers with loans prior to June 30, 2026 will be IBR and RAP.
This final phase completes a transition away from the patchwork of repayment plans built 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 borrowing before July 2026 retain access to more generous loan limits and repayment protections. Those borrowing after face tighter rules but a more standardized system.
Families planning for college should pay close attention to enrollment dates, borrowing years, and total costs. Graduate and professional students, in particular, may want to compare starting before versus after key cutoff dates.
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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.