If you or your family members are preparing for college or are already managing student loans, there are some important updates on the horizon.
Beginning July 1, 2026, changes to federal student loan programs will affect how borrowers pay for school and manage repayment. These updates come from legislation passed in 2025 and will roll out in phases starting this year.
While these changes mostly affect new borrowers, those with existing federal student loans may still see some impact over time through updates to repayment options.
What’s Changing for New Borrowers: Limits Will Be More Defined
One of the biggest changes is how much students and families can borrow through federal loans.
New limits will place clearer caps on borrowing. Graduate students will be limited to $20,500 per year, with a $100,000 lifetime cap, while professional students, such as those in law or medical programs, will be limited to $50,000 per year and $200,000 total. Parent PLUS loans will also be capped at $20,000 per year per student, with a $65,000 lifetime limit.1
In addition, Grad PLUS loans, which previously allowed graduate students to borrow up to the full cost of attendance, will no longer be available for new borrowers.1
As a result, some borrowers may need to rely more heavily on savings, scholarships, or private financing to cover any remaining costs.
Repayment Options Will Be Simpler
The law also affects repayment by reducing the number of available plans and introducing a more streamlined system.
Moving forward, borrowers will choose between two options: a standard tiered repayment plan lasting 10 to 25 years, or a new Repayment Assistance Plan based on income, typically ranging from 1 percent to 10 percent of income for up to 30 years.2
At the same time, the current SAVE income-driven repayment plan will no longer be available for new borrowers.2 For many borrowers, this means fewer options for structuring monthly payments, but potentially a simpler process overall.
Additional Changes to Be Aware Of
Most changes begin July 1, 2026, with additional updates in the following months. Beginning July 1, 2027, new rules will place limits on deferment and forbearance, reducing the flexibility to pause payments for extended periods.
What These Changes Mean for You
The student loan landscape is evolving, and these updates reflect a broader shift in how borrowing and repayment work. While the process may become easier to navigate, it also means taking a more proactive approach to planning for education costs and repayment.
Everyone’s situation is a little different, but a few key themes stand out. You may have clearer limits on how much you can borrow and fewer repayment plan options to choose from. That makes it even more important to understand your options early and plan ahead with confidence.
If you already have federal student loans, you may not see immediate changes. But staying informed now can help you feel more prepared and make confident financial decisions as things continue to evolve.
We’re Here to Help
At CommunityAmerica, we know these changes can feel overwhelming, and we’re here to support you. You can meet with a Financial Well-Being Coach to build a budget and talk through your options or take advantage of our college-planning support to feel more prepared before you borrow. And if you need additional funding, our student loan options can help bridge the gap.
