Important Updates for Student Loan Borrowers
- Erin
- 2 days ago
- 5 min read
With the passing of the One Big Beautiful Bill Act (OBBBA), updates to federal student loans have been in the works for quite some time. However, these updates have hardly been transparent in a way that leaves borrowers feeling confident about their next steps. We’ll take a look at what’s been updated, who is affected, and how those folks can take necessary steps in accordance with those changes.
Changes to Federal Student Loans
There are a number of updates, so we’ll walk through them one at a time.
The Saving on a Valuable Education (SAVE) repayment plan has been discontinued.
This change will affect over 7 million borrowers, and because many folks with outstanding student loans hold a variety of loan types, it’s best to check whether you’re among those affected. More on this later!
Student loan servicers must contact borrowers regarding changes, and can do so via postal mail or email depending on a borrower’s communications. These notifications are anticipated to begin going out near the end of June 2026, but in some cases have already been distributed.
Important note: There is a 90-day deadline associated with choosing a new plan once you’ve been notified, so keep this in mind. A failure to select and apply for a new repayment plan will likely result in an automatic assignment to the new Standard Plan for loan repayment, which may not suit your financial needs.
If you have loans affected by the discontinuation of the SAVE plan, you’ll want to follow the steps shared in the next section to ensure you’re set up for a new plan that works well for you.
New repayment plans have been introduced: the Repayment Assistance Plan (RAP) and a new Tiered Standard Plan.
Anyone taking out federal student loans after July 1, 2026 will be limited to the following repayment plans:
Repayment Assistance Plan (RAP) - this plan will replace other income-driven repayment plans (IDRs), such as SAVE, Pay As You Earn (PAYE), and Income-Contingent Repayment plans (ICRs).
Tiered Standard Plan - This plan allows for a balance-based timeline for repayment, as opposed to a strict 10-year payoff timeline.
New borrowing caps are in place for borrowers who take out federal student loans on or after July 1, 2026.
A number of changes fall within this category:
Graduate PLUS loans are being phased out altogether. How you’re affected by this will be determined by whether you’re a past borrower with no intended future loans, a borrower who planned to use Grad PLUS loans, or an existing borrower still enrolled in a program being funded by Grad PLUS loans.
Graduate PLUS loans will no longer be available to new borrowers starting July 1, 2026
For existing borrowers, those currently enrolled in a program will remain eligible to use Grad PLUS loans during a 3-year period or until program completion.
If a borrower unenrolls or otherwise leaves the covered program, they will no longer be eligible and will be subject to current student loan rules.
Graduate Unsubsidized Direct Loan limits will also be in place beginning July 1, 2026. Those in what the federal government considers to be “professional programs” will be able to borrow up to $50,000/year, $200,000 total. Those in programs considered “other graduate programs” will be eligible for up to $20,500/year, $100,000 total.
Parent PLUS loan borrowers will be capped at $20,000/year, with a lifetime cap of $65,000.
A combined lifetime borrowing limit of $257,500 will also be in effect for new borrowers starting July 1, 2026, exclusive of Parent PLUS loans. Harvard University’s up-to-date coverage of adjustments to borrowing limits is excellent if you’d like to learn more.
New forbearance limits will be in place, and deferment for economic hardship and unemployment will be eliminated going forward.
New forbearance limits will be strict: no more than 9 months of forbearance will be allowed within a given 2-year period for loans taken out on or after July 1, 2027.
Additionally, economic hardship and unemployment deferment options will be eliminated altogether for loans taken out on or after July 1 2027.
Public Student Loan Forgiveness (PSLF) payments are changing, too.
Changes to standards for employer eligibility and restructuring of which repayment plans are available and count toward forgiveness-eligible payments have left many seeking PSLF confused and frustrated. If you’re among them, it is important to ensure that any repayment plans you’re enrolled in will count your payments toward PSLF, and that your employer falls within the new eligibility standards laid out by the US Department of Education. Please keep in mind that these standards are evolving, and are the subject of ongoing legal scrutiny.
In the following sections, we’ll discuss steps to ensure you stay on top of these changes and how they affect you, and we’ll share important resources for borrowers.
What Do I Do About Changes to My Student Loan Repayment Plan(s)?
First, don’t panic. There are many ways to assess your current situation, compare repayment options, and figure out what’s best for you. Here’s what we recommend:
Identify which, if any, of your existing loans are affected by the changes we discussed above to repayment, Public Student Loan Forgiveness, etc.
Log into StudentAid.gov and look for notifications.
Log into your dashboards for any and all loans, and look for notifications or other communications, including in your digital inbox.
Read these communications and ascertain next steps as instructed therein
Use the tools available on StudentAid.gov to compare plans, estimate costs and monthly amounts for adjustments to repayment, and view a summary of any servicer(s) currently active on your loans.
Learn about any federal student loan forgiveness options available to you.
Apply for any necessary changes within the time allotted, and get support if needed!
Whether your existing repayment plans will stay in place or you’ll be switching to a new plan or plans, you have the option to allow the Department of Education to conduct automatic annual recertification of your income and eligibility for repayment plans by granting access to your tax returns. Alternatively, you may choose to conduct a manual income verification every year.
In the meantime, if you are in a position to do so, you can opt to make larger payments than those currently required, or you can choose to make voluntary payments if you’re currently in a forbearance period. This can help prevent additional interest accrual, but should be considered within the context of your overall financial plan.
For those who are eligible, private refinancing of their student loans is also an option, but this should be considered carefully. This option will remove the potential for Public Service Loan Forgiveness, income-based forgiveness options, and other federal protections or updates.
As always, any updates should be considered carefully, and within the scope of your current financial plan. If you’d like help assessing your options and creating a strategy, we’re here to help.
Tools and Resources for Student Loan Borrowers
This tool can help you compare repayment plan options, calculate repayment duration, and estimate monthly payments according to your income, tax filing status, and other factors.
Look up your specific borrower situation on the US Department of Education’s Federal Student Aid site.
While this resource can only point you in the right direction, it does offer a series of drop-downs with details, resource links, and FAQs for borrowers in different stages of borrowing versus repayment.
Learn about Loan Forgiveness options available to you.
The US Department of Education does offer student loan forgiveness in certain scenarios, and anyone eligible should look into their options.
The Bottom Line on Changes to Federal Student Loans
We know this is a confusing time for many folks, and while the information in this article doesn’t cover every aspect of the changes borrowers will encounter, we hope it can be used as a helpful guide.
If you’d like to discuss how changes to your student loan repayment options may affect your budget, your financial goals, and your financial picture as a whole, let’s chat.
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