Student Loan Changes July 2026: New Limits and Repayment Rules

If you’re one of the millions of Americans carrying federal student debt, this week brought the biggest shake-up to the loan system in a generation — and depending on your situation, it could mean anything from a minor adjustment to a completely different repayment picture.

The changes, part of the sweeping legislation passed last year, officially took effect on July 1. For borrowers taking out new federal loans from here on out, the menu of repayment options just got a lot shorter. Instead of the half-dozen or so plans borrowers used to be able to choose from, new borrowers are now limited to just two: a Standard Plan with fixed payments stretched over 10 to 25 years depending on how much you owe, or a new income-driven option called the Repayment Assistance Plan, or RAP, which ties your monthly payment to your income and can lead to forgiveness after three decades of payments.

Parents are feeling the pinch too. Parent PLUS loans now come with hard caps — $20,000 a year and $65,000 total per child — replacing the old system that let parents borrow up to the full cost of attendance. New Parent PLUS borrowers are also locked out of income-driven repayment entirely and can no longer use those loans toward Public Service Loan Forgiveness unless they consolidated before the deadline.

Perhaps the biggest scramble is happening among the roughly 7 million borrowers who’ve been sitting in the SAVE plan, which has been tied up in litigation for years and formally eliminated by the new law. Those borrowers are now getting 90-day notices to pick a new repayment plan. Miss that window, and you’ll be automatically dropped into a standard plan — which for a lot of people could mean a noticeably bigger monthly bill.

There’s some good news buried in the fine print for existing borrowers who don’t plan to take out any new loans. They generally get to keep their current repayment options for now, including the old Income-Based Repayment plan, though a couple of the older income-driven plans are set to be phased out completely by 2028.

Graduate and professional students are seeing new lifetime borrowing caps as well — $100,000 for most graduate programs and $200,000 for professional degrees like law and medicine — and the Grad PLUS loan program has been shut off entirely for anyone who hadn’t already borrowed before the cutoff.

Financial aid offices around the country are bracing for a wave of confused calls in the coming weeks. The general advice from experts: don’t take out a new loan or consolidate an existing one without first understanding exactly which repayment options you’ll lose access to, because for many borrowers, that one decision could lock them into a very different financial future.