Student loan borrowers will soon face changes to how federal student loans are borrowed and repaid. New federal laws and regulations are reshaping the student loan system, affecting both current borrowers and students who take out loans in the future.
Many of these changes take effect on July 1, 2026, while others will continue rolling out over the next several years. Understanding these updates can help borrowers avoid unexpected payment increases and make informed decisions about their education and finances.
The federal government is replacing several existing student loan repayment options and creating new borrowing limits for certain types of loans.
Some of the biggest changes include:
The Saving on a Valuable Education (SAVE) Plan is being phased out. Borrowers who enrolled in SAVE will need to select a different repayment option. Borrowers who do not choose a new plan may be automatically placed into a standard repayment plan with higher monthly payments.
If you are currently enrolled in SAVE, watch for communications from the U.S. Department of Education and your loan servicer. Missing important deadlines could result in higher monthly payments.
Beginning July 1, 2026, borrowers taking out new federal student loans will generally have only two repayment options:
Borrowers who took out all of their federal student loans before July 1, 2026, will generally retain access to some existing repayment programs, including Income-Based Repayment (IBR). However, certain plans, including SAVE, PAYE, and ICR, are scheduled to be phased out. Borrowers enrolled in those programs may eventually need to transition into another repayment option.
Current borrowers should regularly review their repayment status and ensure their contact information is up to date with their loan servicer.
Beginning July 1, 2026, Graduate PLUS loans will no longer be available to most new borrowers. Students who already borrowed Graduate PLUS loans before that date may be able to continue borrowing under limited grandfathering rules while completing their current program.
This change may affect students pursuing graduate or professional degrees, including law, medicine, and dentistry.
The new law also establishes borrowing limits for graduate and professional students.
For many graduate programs, federal borrowing will be capped at lower amounts than were previously available.
Parents who borrow federal Parent PLUS loans will also see changes.
Beginning July 1, 2026:
Families planning for college should review financial aid packages carefully and consider how these new limits may affect their ability to pay educational expenses.
At this time, Public Service Loan Forgiveness (PSLF) remains available. Borrowers working for qualifying government agencies and nonprofit organizations may still be eligible for loan forgiveness after making the required qualifying payments.
However, borrowers should pay close attention to repayment plan requirements and any future guidance from the Department of Education.
If you have federal student loans, consider taking these steps:
While some borrowers may continue using existing repayment options for now, many will eventually need to transition to new programs.
Understanding these changes early can help borrowers avoid surprises and make informed decisions about their education and financial future.
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