06 Oct What Changes Did The ‘One Big Beautiful Bill’ Make to Student Loans?

October 6, 2026 ~ The ‘One Big Beautiful Bill’ (OBBBA), or H.R. 1, was passed in July 2025. The bill has sweeping effects in many areas, including federal student loans. These changes will impact millions of student loan borrowers, including people looking to go back to school and those repaying their loans. Some of the changes include:

• New limits on the amount you can borrow, including for graduate and professional school
• Ending deferments for unemployment or economic hardship
• Limits on forbearance
• New Repayment Assistance Plan (RAP) replaces most other income-driven repayment plans (IDRs)
• Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) repayment plans will be phased out
• End of the SAVE Plan and Graduate PLUS loans

How Might These Changes Affect Me?

If you are a current borrower, your repayment options may have changed. Options for both income-driven repayment plans (IDRs) and fixed payment plans have changed. Also, if you need to defer payments on your student loans, two options (economic hardship and unemployment) are being ended, and forbearance options will become more limited.

If you are planning to borrow, your options for loans you may receive have changed. There are new limits on borrowing for graduate and professional school that could affect your ability to take out federal student loans and what repayment options are available to you later.

When Do These Changes Go Into Effect?

Changes to federal student loans began July 1, 2026, and more are being phased through 2027 and 2028.

What are the New Limits on New Loans?

There are three different types of limits on new loans defined by the Department of Education:

• Annual loan limits: the maximum you can borrow each year
• Aggregate loan limits: the maximum outstanding balance you can have on your loans
• Lifetime loan limits: the maximum amount you can borrow in your lifetime

Annual and aggregate limits may depend on if you are an undergraduate, graduate, or professional student, how far along you are in your degree, and if you are a dependent.

There is a new cap on lifetime loans. For new undergraduate student borrowers whose first loan will be disbursed after July 1, this new lifetime limit is $257,500 for all subsidized or unsubsidized loans, except for the Direct PLUS plan for parents (or Parent PLUS).

The Parent PLUS plan limits loans to $20,000 annually, and an aggregate limit of $65,000 per student in total. Direct PLUS loans are now only available to undergraduate students. Parent PLUS loans apply per student, not per parent, so if two or more parents applied for a PLUS loan, they could not borrow more than $20,000 annually, or $65,000 in aggregate. This limit may increase if one or more parents have adverse credit.

For postgraduate students, there are significant changes to professional or graduate school loans:

• Graduate students may borrow up to $20,500 annually in direct unsubsidized loans, with a $100,000 lifetime limit.
• Professional students may borrow up to $50,000 per year in unsubsidized loans, with a $200,000 lifetime limit (minus any amount received as a graduate student).

What is a Professional Student?

There has been confusion over the definition of a professional student under the OBBBA. The United States District Court for the District of Columbia has ordered a preliminary stay on part of the OBBBA’s definition of a professional student. Currently, the Department of Education considers the following categories and related programs to be within its definition, though students should reach out to their education institution to see if these changes apply to them.

• Pharmacy (Pharm.D.)
• Dentistry (D.D.S. or D.M.D.)
• Veterinary Medicine (D.V.M.)
• Chiropractic (DC or DCM)
• Law (L.L.B. or J.D.)
• Medicine (M.D.)
• Optometry (O.D.)
• Osteopathic Medicine (D.O.)
• Podiatry (D.P.M, D.P., or Pod.D.)
• Theology (M.Div. or M.H.L.)
• Clinical Psychology (Psy.D. or Ph.D.)

What is the Interim Exception?

For some people, there will be an interim period after July 1, where they may be eligible for a Direct Loan under pre-OBBBA limits.

For those that qualify, they are exempt from some loan limits and eligibility changes for either three academic years, or the difference between the published length of the program enrolled in and the actual period of time it took to complete it (whichever is less).

Undergraduate Students

Your parent may be able to borrow a Direct PLUS loan for parents if you:

• Were enrolled in a program of study as of June 30, 2026;
• Received at least one Direct Loan, or your parent borrow a Direct PLUS loan on your behalf, for that program of study prior to July 1, 2026; and
• Are enrolled at the same school seeking the same degree after July 1, 2026

If the undergraduate student is eligible for the exception and maintains that qualification, the new limits will be enforced no later than the 2029-2030 award year. If you qualify, the maximum annual limit your parents may borrow under a Parent PLUS loan is your cost of attendance minus any other aid you received.

Graduate and Professional Students

You may qualify for the interim exception as a graduate or professional student if you:

• Were enrolled in a program of study as of June 30, 2026;
• Received at least one Direct Loan for that program of study prior to July 1, 2026; and
• Are currently enrolled at the same school seeking the same degree after July, 2026

This interim exception applies to eligibility for Graduate PLUS loans. Graduate PLUS loans are being phased out under the OBBBA.

How Does This Impact Repayment Plans?

Some loans are repaid by income-driven repayment plans (“IDR”), which base your monthly loan payment on your income and family size. There are currently four types of IDRs:

• Repayment Assistance Plan (RAP)
• Income-Based Repayment Plan (IBR)
• Income-Contingent Repayment Plan (ICR)*
• Pay As You Earn Plan (PAYE)*

Many people use IDRs, including those applying for Public Service Loan Forgiveness (PSLF).

*Two of these plans, the ICR and PAYE, will be phased out by July 1, 2028.

If you are a borrower who received a loan prior to July 1, 2026, you can still enroll in IBR, ICR, or PAYE. If you had to consolidate your loans to access those plans, you must have received your consolidated loan by June 30, 2026, to be able to enroll prior to ICR and PAYE’s sunset in 2028.

RAP and IDR Plans

The Repayment Assistance Plan (RAP) replaces most other IDRs (ICR, PAYE, SAVE). It is a repayment plan based on your income. For new borrowers taking out loans after July 1, 2026, RAP will be their option for an IDR plan. It is calculated using your adjusted gross income (AGI) in a tax year minus some adjustments, like student loan interest or contributions to a tax-deferred retirement plan. Monthly payments are between 1 and 10 percent of the borrower’s income, starting at a monthly minimum of $10.

Borrowers who make their monthly payments on-time and in full will have unpaid interest for that month subsidized. Interest that accrues when the borrower is not repaying the loan (or that accrued before enrolling in RAP) – meaning if you are deferring payments or in forbearance – will not. For borrowers using RAP, the eligible remaining balance on the loan may be forgiven after 30 years (360 months) of payments.

To enroll in an IBR plan before OBBBA was passed, borrowers had to demonstrate partial financial hardship and not have certain ineligible loans. Under OBBBA, borrowers do not have to demonstrate financial hardship. Monthly payment caps and the formula for determining the amount are remaining the same. Not all borrowers will have access to the IBR plan, however.

Parent PLUS borrowers whose PLUS loans are not consolidated and recipients of Perkins loans and other small loans not consolidated into a Direct or Federal Family Education Loan (FEEL) program cannot use an IBR plan. If these categories apply to you, (ex. You are a Parent PLUS borrower), the consolidated loan must have been disbursed no later than June 30, 2026 to be eligible. In 2027, payments for the IBR plan must be on time and in full to have their interest subsidized.

Tiered Standard Repayment Plan

There is another new repayment plan called the Tiered Standard Repayment Plan. This is a fixed repayment scheme that divides payments into tiers of 10, 15, 20, or 25 years based on the amount borrowed. The Tiered Standard plan replaces the Standard Repayment Plan for any direct loans disbursed on or after July 1, 2026.

If you have a single loan (including a Direct Consolidation Loan) disbursed on or after July 1, 2026, your only repayment plan options are the RAP and Tiered Standard Plan. Certain loan types are only eligible for the Tiered Standard Plan, including:

• Direct PLUS Loans for parents
• Direct Consolidation Loans that paid off a Direct PLUS Loan for parents
• Direct Consolidation Loans that paid off a Direct Consolidation Loan that paid off a PLUS loan for parents (double consolidation)

While most Direct Loans have to be paid under the same repayment plan, if you have any of the loans that require repayment under the Tiered Standard Plan and any of the loans listed below, then the loans listed below may be repaid either under the Tiered Standard Plan with your other loan(s) or separately under the RAP:

• Direct Subsidized Loans
• Direct Unsubsidized Loans
• Direct PLUS Loans for graduate or professional students
• Direct Consolidation Loans that don’t include a PLUS loan for parents

What Happened to the SAVE Plan?

The Saving on Valuable Education Plan (SAVE) was eliminated under OBBBA. The SAVE Plan was launched in 2023, as an option for income-driven repayment. As of July 1, 2026, the SAVE Plan has been ended, and those enrolled will have to choose a new IDR plan. The Department of Education began to send notices to SAVE Plan borrowers on July 1, and upon receipt of that notice, borrowers must choose a new plan within 90 days or their servicer will move the borrower to a different plan.

What is Happening to PSLF Loan Forgiveness?

There are some important changes happening to Public Service Loan Forgiveness (PSLF). The current qualifying repayment plans remain intact, and RAP will now also qualify toward PSLF. For a month to count toward both IDR and PSLF while in RAP, the payment must be timely and in full, and the borrower must be working in certified qualifying employment.

If you want your loans to be discharged using the Temporary Expanded PSLF (TEPSLF) program, some or all of your 120 monthly payments will be made under the consolidation Standard, Extended, or Graduated repayment plans. RAP will not be an eligible IDR for purposes of TEPSLF.

What Happens If I Can’t Repay My Loan?

In some circumstances, you can apply for a deferment when you can’t pay your loans. This includes deferments for cancer treatment, rehabilitation, and military service.

Two categories of deferments, including economic hardship and unemployment, will no longer be available for loans disbursed on or after July 1, 2027. Economic hardship deferments apply to those who:

• Are receiving a means-tested benefit (ex. Temporary Assistance for Needy Families, or TANF);
• Work full-time but have a monthly income that isn’t more than minimum wage, or 150% of the poverty line for your family size and state where you live; or
• Are currently serving in the Peace Corps

Forbearance (a temporary pause or reduction in payments) options are more limited for borrowers who receive a Direct Loan or Parent PLUS loan on or after July 1, 2026. After that time, borrowers can only use 9 months of forbearance over 2 years. Borrowers will be able to rehabilitate their loan out of default two times (rather than once). Minimum monthly payments on direct loans will be $10.

What are the Changes to Pell Grants?

A Pell Grant is awarded to students with exceptional financial need who do not already have a degree. Under OBBBA, eligibility for Pell Grants has expanded to some eligible workforce programs. Colleges or trade schools who offer such programs can apply to the Education Department to be able to accept Pell Grants for these programs as of July 1, 2026. To apply for a Pell Grant, you must complete and submit a Free Application for Federal Student Aid (FAFSA) form each year you are enrolled. The amount you received for a Pell Grant will be prorated for the length of the workforce program, which may not be longer than 14 weeks.

Next Steps for Current Borrowers

If you already have loans, you should check your account with the Federal Student Aid (FSA) website to see how the changes to repayment plans impact your loan. Keep an eye on your mail, especially if you were enrolled in a plan that has been eliminated like SAVE. You may be able to keep your access to IDRs like ICR and PAYE if you are already enrolled, but that will end by July 1, 2028. For Parent PLUS Loans, unless you qualify for an interim exception, borrowing limits will apply as of July 1, 2026.

Next Steps for Future Borrowers

Check in with what loan options you may have access to under the new rules. Some options have been limited (like Parent PLUS) or ended (like Graduate PLUS). Your options for borrowing may have changed, so you will need to check your estimated total cost and what amount you are looking to borrow when considering enrolling in furthering your education. Continue to check in with the Federal Student Aid page to check your eligibility and see how options may continue to change.

Where to Go for Help

If you need help understanding these recent changes and what to do going forward, the National Consumer Law Center (NCLC)’s Student Loan Borrower Assistance project is a good place to start. NCLC has educational information about student loan basics, help dealing with student loan debt, and resources on where to find legal help or file a complaint about the handling of your student loan.

If you are looking for more information about managing finances after a cancer diagnosis, visit Triage Cancer’s Navigating Finances page for quick guides, videos, and webinars on a variety of financial topics.

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