The federal student loan system is heading for one of its most dramatic overhauls in decades. Beginning in 2026, how students borrow, repay, and qualify for forgiveness will look very different from today. These reforms stem largely from new legislation passed under the Trump administration, reshaping the structure of repayment plans, borrowing limits, and forgiveness eligibility.
For millions of borrowers, the upcoming student loan changes 2026 will determine how affordable repayment is for years—or even decades—to come. While new borrowers will feel the most immediate impact, existing borrowers are not immune. Understanding what’s changing now can help you avoid costly mistakes later.
A Smaller Set of Repayment Plans Starts in 2026
Starting July 1, 2026, federal student loans issued after that date will come with far fewer repayment choices. Instead of today’s wide menu of options, new borrowers will choose between just two plans.
The Standard Repayment Plan will continue to offer fixed monthly payments over a term ranging from 10 to 25 years, depending on the total loan balance.
The new Repayment Assistance Plan (RAP) introduces an income-based structure. Payments will range from 1% to 10% of adjusted gross income, with a minimum payment of $10 per month for borrowers earning under $10,000 annually. Any remaining balance may be forgiven after 30 years of payments.
This simplification is one of the most significant student loan changes 2026, aiming to streamline—but also restrict—borrower choice.
What Happens to Current Borrowers
If your loans were disbursed before July 1, 2026, your existing options won’t disappear overnight. Borrowers will still have access to several current plans, including the 10-year Standard Plan, Graduated Repayment, and Extended Repayment.
Income-driven repayment (IDR) plans such as Pay As You Earn (PAYE), Income-Contingent Repayment (ICR), and Income-Based Repayment (IBR) will remain available temporarily. However, PAYE and ICR are scheduled to sunset in 2028, forcing borrowers to transition to either IBR or RAP.
Knowing your timeline is critical as student loan changes 2026 unfold in phases rather than all at once.
Income-Driven Repayment Plans Are Being Phased Out
One of the most impactful shifts involves income-driven repayment. For loans issued after July 1, 2026, RAP will be the only income-based option.
Existing borrowers face different outcomes depending on their current plan:
- Borrowers on PAYE, ICR, or the discontinued SAVE plan must switch to IBR or RAP by July 1, 2028.
- Borrowers already on IBR can remain or transition to RAP if beneficial.
- Borrowers who fail to choose may be automatically enrolled by their loan servicer.
This consolidation marks a fundamental shift in how affordability is calculated under student loan changes 2026.
Parent PLUS Borrowers Face New Restrictions
Parent borrowers will encounter stricter rules. Parent PLUS loans issued after July 1, 2026, will not qualify for the new Repayment Assistance Plan.
Currently, Income-Contingent Repayment is the only income-driven option for Parent PLUS loans—and only after consolidation. Parents who want access to income-driven repayment or future forgiveness options must act before the 2026 deadline.
For families relying on Parent PLUS loans, these student loan changes 2026 require careful planning.
The SAVE Plan Has Been Fully Shut Down
The SAVE plan, once promoted as a major affordability solution, has now been permanently eliminated. Following prolonged legal challenges, the Department of Education will no longer enroll new borrowers and is transitioning existing SAVE participants into alternative plans.
Borrowers previously shielded by SAVE-related payment pauses must now reassess their repayment strategy. Tools like the Federal Student Aid Loan Simulator can help compare options under the new framework.
Federal Borrowing Limits Are Tightening
Borrowing caps are also changing significantly under student loan changes 2026:
- Graduate students: Up to $20,500 per year, $100,000 lifetime limit
- Professional students: Up to $50,000 per year, $200,000 lifetime limit
- Parent PLUS loans: Up to $20,000 per year per student, $65,000 lifetime limit
Undergraduate borrowing limits remain mostly unchanged, though part-time students will see reductions tied to enrollment status.
Current borrowers retain access to old limits for up to three years or until program completion, offering a temporary cushion.
Grad PLUS Loans Are Being Eliminated
Graduate and professional students will no longer have access to Grad PLUS loans for new borrowing after July 1, 2026. These loans previously allowed students to borrow up to the full cost of attendance with minimal credit checks.
Without Grad PLUS loans, students may need to rely more heavily on scholarships, grants, employment income, savings, or private student loans. This change alone could significantly alter graduate education financing under student loan changes 2026.
Public Service Loan Forgiveness Gets Narrower for Parents
Parent PLUS loans issued after July 1, 2026, will no longer qualify for Public Service Loan Forgiveness due to ineligibility for income-driven repayment under RAP.
Parents already working toward PSLF can still qualify—but only if they consolidate and enroll in an eligible plan before deadlines expire. Missing these steps could permanently close the PSLF door.
Deferment and Forbearance Become More Limited
Future federal loans will no longer qualify for economic hardship or unemployment deferments. Forbearance will also be capped at nine months within a two-year period, down from the current 12-month allowance.
These limits reflect a broader effort to reduce long-term payment pauses as part of student loan changes 2026.
Student Loan Forgiveness May Become Taxable Again
The federal tax exemption for student loan forgiveness expires at the end of 2025. Unless extended, borrowers receiving forgiveness in 2026 or later may owe federal taxes on the forgiven amount.
This applies primarily to income-driven forgiveness—not Public Service Loan Forgiveness, which remains tax-free.
How to Prepare Now
To stay ahead of student loan changes 2026, borrowers should:
- Review current repayment plans and deadlines
- Compare future repayment scenarios early
- Track key transition dates through 2028
- Plan for tighter borrowing limits
- Act quickly if you’re a parent borrower
- Prepare for potential tax liabilities
- Keep loan servicer contact information updated
Conclusion
The federal student loan system is entering a new era defined by fewer options, stricter limits, and higher responsibility placed on borrowers. While the student loan changes 2026 aim to simplify repayment, they also raise the stakes for making informed decisions.
Whether you’re a current borrower or planning to take out loans in the future, preparation is your strongest asset. Those who understand the changes early—and act before deadlines—will be best positioned to navigate the new system with confidence and control.