A major overhaul is coming for federal student loan borrowers.
The One Big Beautiful Bill Act (OBBBA) was passed into law last year, but many of the changes related to student loans go into effect starting July 1, 2026. Those changes can affect everything from loan forgiveness eligibility, repayment options, loan limits, and much more.
Whether you’re looking to borrow loans for the upcoming school year or you’re paying off existing loans, here’s what you need to know before July 1.
Jump to FAQ section:
New repayment options
What are the new repayment plans?
Here’s a look at the two new repayment plans for borrowers:
Tiered Standard Plan: Make fixed monthly payments over a maximum repayment period based on your total outstanding principal balance. Repayment periods range from 10 to 25 years, and payments are at least $50 per month.
Repayment Assistance Plan (RAP): Monthly payments are based on your income and number of dependents. Any remaining balance after 30 years of payments will be forgiven.
If you have any Direct Loan disbursed on or after July 1, 2026, these two plans will be your only repayment options. Parent PLUS borrowers who take new loans after July 1 are only eligible for the Tiered Standard Plan.
Related: Is your student loan repayment plan about to be eliminated? What to know before July 1.
How does RAP calculate my payment?
To find your monthly payment under new Repayment Assistance Plan (RAP), divide your adjusted gross income (AGI) by 12 and then multiply by your base payment percentage (it ranges from 1% to 10%, depending on income). Then subtract $50 per month for each dependent you have. The minimum amount you can pay monthly is $10.
Here’s an estimate of what your monthly payment would be under RAP:
Table source: StudentAid.gov
*This chart assumes you have no dependents. Subtract $50 from the monthly payment amount for each dependent you claim on your federal income tax return for a more accurate estimate.
How long until my loans are forgiven under RAP?
If you still have a balance on your loans after making payments under the RAP for 30 years, the remaining balance is forgiven. Forgiveness through the RAP payment term is taxable as income.
RAP enrollees may also be eligible for Public Service Loan Forgiveness (PSLF). If you qualify for this program, you could receive forgiveness in as little as 10 years.
Does RAP offer any interest protections?
Yes, unlike previous income-driven repayment plans, RAP offers an interest subsidy in some cases. If your required payment is less than the interest that accrues on your debt each month, RAP will waive that unpaid interest. This means that your loan balance won’t grow under RAP, assuming you make all of your payments on time and don’t defer payments.
New federal student loan borrowers
What repayment options do I have as a new borrower?
If you don’t have any existing federal student loans and you borrow after July 1, 2026, you can choose to repay your Direct Loans under either the Tiered Repayment Plan or Repayment Assistance Plan.
If you’re borrowing new Parent PLUS Loans, you must pay them off using the Tiered Repayment Plan.
I’m taking out new loans after July 1, 2026, but I also have existing loans. What are my options?
If you take on any new federal loan after the July 1 change, all of your Direct Loans — including loans from previous years — must be repaid using either the Tiered Repayment Plan or Repayment Assistance Plan.
Parent PLUS Loans are only eligible for the Tiered Repayment Plan.
Are new borrowers still eligible for federal loan forgiveness?
Yes, student borrowers can still qualify for forgiveness programs. This includes:
RAP forgiveness: If you have a remaining balance after 30 years of payments in RAP, it will be forgiven.
Public Service Loan Forgiveness (PSLF): New borrowers who work for a qualifying government or nonprofit employer and make 120 payments are eligible for forgiveness on their remaining debt.
Teacher Loan Forgiveness: Qualifying full-time teachers who make 5 years of consecutive payments can be eligible for up to $17,500 in loan forgiveness.
Related: Do I qualify for student loan forgiveness? What’s changed under Trump.
Existing student loan borrowers
All of my loans were taken out before July 1, 2026. What are my options?
If you don’t plan to take on any new federal student loans, you have more options.
After July 1, you’ll remain eligible for most existing repayment options. Student borrowers at any level and Parent PLUS borrowers can continue to use the Standard Repayment Plan, Graduated Repayment Plan, Extended Repayment Plan, or Pay As You Earn (PAYE) plan.
Student borrowers can also continue to use an Income-Based Repayment (IBR) plan or Income-Contingent Repayment (ICR) plan, or choose the new Repayment Assistance Plan. The only plan you won’t have access to is the new Tiered Repayment Plan.
Parent PLUS borrowers are not eligible for the Repayment Assistance Plan, though Direct PLUS Loans for parents can be repaid using the Tiered Repayment Plan.
Parent PLUS borrowers can also use existing income-based plans in some cases. Parents who want to use IBR or ICR plans must consolidate their Parent PLUS Loans into a Direct Consolidation Loan. However, the new consolidation loan must be disbursed before July 1. If you wait until after July 1 to consolidate your Parent PLUS Loan, you won’t have access to the IBR or ICR plan.
Just remember, ICR and PAYE plans will be phased out by July 2028. If you don’t plan to repay your loans in full by that time, you may eventually have to move to another plan.
I took out new loans after July 1, 2026, but I also have old loans. Which rules apply?
If you take out any new Direct Loans after July 1, you are considered a new borrower and will lose access to the legacy repayment options. You must repay all of your Direct Loans under either the Repayment Assistance Plan (RAP) or the Tiered Standard Plan.
What if I consolidate my loans after July 1, 2026?
If you consolidate your loans after July 1, you are considered a new borrower and will lose access to the legacy repayment options. This applies to both student and parent borrowers who consolidate after that date.
Students who consolidate will be eligible for both the Repayment Assistance Plan (RAP) or the Tiered Standard Plan; parents who consolidate are only eligible for the Tiered Standard Plan.
Should I switch from IBR to RAP?
The best plan for you depends on your situation. If all of your loans were disbursed before July 1, 2026, you’re eligible for both IBR and RAP. If any of your loans were borrowed after that date, you can’t qualify for IBR.
Many borrowers may find their payments are smaller under IBR, which also requires fewer years of repayment than RAP. You can compare your options under both plans using StudentAid.gov’s federal loan payment simulator or the payment plan estimator from the Education Debt Consumer Assistance Program.
Be cautious if you’re pursuing income-driven forgiveness and want to switch plans. When you previously transferred your loans between income-driven plans, your payment counts would transfer, too. That’s still the case if you switch from IBR to RAP. But if you later switch out of RAP, the payments you made under RAP will not count toward income-driven forgiveness such as IBR. (RAP payments do still count toward PSLF.)
Read more: IBR vs. RAP: Which federal repayment plan should you pick?
I’m working toward Public Service Loan Forgiveness (PSLF). How can I make sure I’m still eligible?
If you’re planning to take on new loans after July 1, your repayment options are limited to the Tiered Standard Plan or Repayment Assistance Plan. However, Tiered Standard Plan payments are not eligible for PSLF — so you’ll need to choose the Repayment Assistance Plan for any new loans.
For eligible loans disbursed before July 1, 2026, you can continue to use an existing PSLF-qualifying repayment plan (current income-driven repayment plans) or opt into the new Repayment Assistance Plan.
You must make your Repayment Assistance Plan payments on time and in full each month for them to count toward your PSLF.
SAVE plan
I’m on SAVE. What do I do?
The SAVE Plan, introduced in 2023 during the Biden Administration, is no longer a student loan repayment option. On July 1, federal loan servicers will start notifying borrowers under this plan that they must enroll in a new plan within 90 days.
You can choose to move to the new income-driven plan called the Repayment Assistance Plan (RAP). If you don’t select a new plan by the 90-day deadline, you’ll automatically be enrolled in either the Standard Repayment Plan or the Tiered Standard Plan.
Does SAVE forbearance count toward PSLF?
Generally, no. Unlike pandemic-era forbearance, which did count toward PSLF, forbearance on the SAVE plan due to the lengthy litigation does not count toward your PSLF payment totals.
Read more: PSLF in 2026: What’s new and what to do if you’re in SAVE
Can I use PSLF Buyback to recover the months I lost in SAVE forbearance?
In some circumstances, yes. You can buy back the months you spend in SAVE forbearance if:
You still have an outstanding balance on your eligible loans
You worked for an eligible employer during those months
Buying back those missing months will complete your total of 120 qualifying PSLF payments
You’ll need to submit an additional form and complete your buyback payments within 90 days to finalize the process. You can learn more about the PSLF buyback program on StudentAid.gov.
New loan limits
What are the new annual loan limits?
The annual limits remain the same for undergraduate loans.
Annual loan limits are changing for graduate and professional students, as well as eligible Parent PLUS Loans.
Grad PLUS Loans for graduate and professional students are no longer available, but students in these programs can still borrow Direct Unsubsidized Loans. For graduate students, annual loan limits will stay the same at $20,500; professional students can now borrow up to $50,000 in unsubsidized loans annually.
Parent PLUS Loans previously had a limit equal to the cost of attendance, minus any other aid a student received. However, parents can now only borrow up to $20,000 per student each year.
If you were enrolled in a graduate program and already received a loan before the July 1 changes (and you’re continuing the same program after that date), you may qualify for an exemption from the new limits. The exemption applies for the lesser of three academic years or the difference between your program length and the amount of time you’ve already completed in the program.
Read more: Grad PLUS is gone. What every grad student needs to know about new borrowing caps.
What are the new aggregate loan limits?
Aggregate loan limits are the maximum amount of unpaid principal minus interest that you can owe at any given time. These limits are similarly changing for graduate students, professional students, and parent borrowers. Aggregate limits apply to subsidized, unsubsidized, and Direct PLUS Loans at any level.
The aggregate loan limit for graduate students is now limited to $100,000. For professional students, the new limit is $200,000 (minus any loan amount received as a graduate student). Previously, both had limits of $138,500.
Parent PLUS Loans previously had no aggregate limits. Now, parents can borrow up to $65,000 per student.
What are the lifetime federal loan limits?
A new lifetime loan limit will apply for all students. It’s the maximum amount you can receive throughout your lifetime across subsidized loans, unsubsidized loans, and Direct PLUS Loans.
Starting in July, the lifetime maximum loan limit is $257,500. Only up to $23,000 may be subsidized.
I’m currently enrolled in a graduate program and have already borrowed. Do the new caps apply to me?
Existing graduate students who have already borrowed at least one loan can continue to borrow under the old loan caps for a limited time. Students eligible for the legacy exception can access additional grad PLUS loans for up to three academic years or until they finish their current program, whichever comes first.
If you switch programs, schools, or have unapproved leaves of absence, you will lose eligibility for this exception. The window for legacy borrowers expires for all students in June 2029.
Who is considered a professional student to qualify for higher loan caps?
Only a narrow set of programs qualify for the higher professional-student borrowing limits of $50,000 per year and $200,000 total, including:
Chiropractic
Clinical psychology
Dentistry
Law
Medicine
Optometry
Osteopathic medicine
Pharmacy
Podiatry
Theology
Veterinary medicine
Those pursuing master’s degrees, MBAs, Ph.D. programs, and many nonclinical graduate programs generally do not qualify for the higher loan caps and are limited to $20,500 per year in federal loans, with a $100,000 total graduate borrowing limit.
Over 25 states have filed a federal lawsuit challenging these degree designations and loan caps.
