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New Federal Student Loan Limits and Repayment Plans Took Effect July 1: What Changed

Grad PLUS loans ended for new borrowers, Parent PLUS is capped, and new borrowers now choose between two repayment plans. The key numbers from the July 1, 2026 overhaul.

By Max, Founder ·
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New Federal Student Loan Limits and Repayment Plans Took Effect July 1: What Changed

New federal borrowing caps and a redesigned repayment system took effect July 1, 2026, ending Grad PLUS loans for new borrowers, capping Parent PLUS loans at $65,000 per student, and setting a $257,500 lifetime borrowing limit across all federal student loans. The changes stem from the One Big Beautiful Bill Act, signed into law in July 2025, and apply to loans disbursed on or after July 1, 2026, CBS News MoneyWatch reported on July 2.

The Education Department is publishing implementation guidance on its official update page at studentaid.gov.

The new borrowing limits

For loans first disbursed on or after July 1, 2026, according to CBS News:

  • Grad PLUS loans: eliminated for new borrowers. Students already borrowing through the program before the deadline are grandfathered in.
  • Parent PLUS loans: capped at $20,000 per year and $65,000 lifetime per student. The program previously allowed borrowing up to the full cost of attendance.
  • Graduate students: $20,500 per year, with a new $100,000 lifetime cap for graduate study.
  • Professional-degree students: $50,000 per year, capped at $200,000 lifetime. CBS News reported that the professional-degree designation now covers additional fields including nursing, anesthesiology, and physical therapy.
  • All borrowers: a $257,500 lifetime cap across all federal student loans.

Two repayment plans for new borrowers

Borrowers taking out their first federal loan on or after July 1, 2026 choose between two plans, replacing the previous menu of income-driven options.

The Repayment Assistance Plan (RAP) sets monthly payments at 1% to 10% of adjusted gross income, with a $10 minimum monthly payment and forgiveness of any remaining balance after 30 years, according to a summary published by Washington State University’s financial aid office in November 2025. The plan reduces the payment calculation by $50 per dependent. When an on-time payment reduces principal by less than $50, the Education Department supplements the principal reduction, up to $50.

The revised Standard Repayment Plan assigns fixed terms of 10, 15, 20, or 25 years based on the amount borrowed, per the same WSU summary.

Consolidation loans made on or after July 1, 2026 are eligible only for RAP or the standard plan.

What happens to existing borrowers

Borrowers with no new loans after July 1, 2026 keep access to their current repayment plans, including Income-Based Repayment, with two phase-out deadlines reported by CBS News:

  • PAYE and ICR: borrowers must switch plans by July 1, 2028.
  • SAVE: the plan sunsets in July 2028. Enrolled borrowers will have 90 days from notification to select a new plan; those who do not choose will be moved to the standard plan.

What comes next

The caps apply to the 2026-27 award year now underway. Financial aid offices are re-packaging awards under the new limits, and the Education Department has said further guidance will be posted to studentaid.gov as implementation continues.

Students comparing how the new limits affect the affordability of specific degrees can review program-level earnings and debt data or model repayment against expected salary with the ROI calculator.

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student loans financial aid Grad PLUS Parent PLUS repayment plans RAP borrowing limits
M

Founder

Max

Undergradly is a small, independent project built and maintained by Max, a software engineer who runs the data pipeline behind the site. Max holds a Bachelor's degree in Software Engineering and a Master of Arts in Linguistics, with 20 years of professional software development experience — most of it spent building systems that turn large public datasets into something people can actually use. Earlier career work included technical writing and interpreting in industrial settings, and several years in international procurement.

Articles are researched and written from primary government and public data we ingest, clean, and analyze in-house: IPEDS (the federal census of colleges), the Department of Education's College Scorecard, U.S. Census PSEO earnings records, Opportunity Insights mobility research, and Bureau of Labor Statistics wage and employment projections. Every verdict on the site — worth-it calls, transfer pathways, ROI comparisons — is derived from those sources, not from reputation surveys or paid placements.

Where a specific figure is cited inline, the relevant dataset is linked in context, and we update content as new federal releases land each year. If you spot an error, write to us and we'll fix it.

IPEDS data analysisCollege Scorecard earnings & debt dataCensus PSEO earnings outcomesEconomic mobility researchTransfer pathway analysisCollege ROI analysis

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