The student loan landscape will change dramatically in 2026, and while many details are still being ironed out in governing negotiations — or actively litigated in court — the broad outline is becoming clearer for both current and future borrowers.
The Big, Beautiful Bill Act (OBBA) made changes that won’t go into effect until July 1, 2026, such as major changes to federal loan repayment plans, or new limits on loans for graduate school. Still, it’s important to get an understanding now, as these changes will have major implications for borrowers.
“So there are two bucket changes,” says Betsy Muti, president and founder of Student Loan Advisors (TISLA), a nonprofit that provides free guidance to student loan borrowers. “There’s a bucket that’s going to affect people who are in school now, or who are considering going to college,” she says. “And then there’s the bucket that affects existing borrowers.”
That’s changing a lot, says Sarah Austin, policy analyst for the National Association of Student Financial Aid Administrators (NASFAA).
While the broad outlines are clear, Austin says, “We still have a lot of unanswered questions in more of the logistical, implementation stuff. And that’s where we’re still in the midst of multiple negotiating principle sessions with the Department of Education fleshing out all those details.”
Here’s what we know about the most notable upcoming changes.
Payment plans
Starting July 1, 2026, new borrowers will have two repayment options:
Standard payment planwhich consists of fixed, equal payments that pay off the loan over a 10-year period. This option has changed.
new Payment Assistance Plan (REP), which was formed under the OBBA approved in July 2025, and will be the only income-driven repayment (IDR) plan available on new loans.
Under RAP, the payment would be 1-10% of the payer’s annual adjusted gross income, based on earnings level, with a flat payment of $10 per year for those earning $10,000 or less. To get forgiveness, the borrower has to make regular payments for 30 years.
Existing borrowers will still have access to a modified version Income based payment plan (IBR), which is a specific project of IDR. However, other IDR plans will be phased in, even for existing borrowers.
What this means for new borrowers
New borrowers will have less flexibility when choosing a repayment plan, as the current menu of IDR options—each tailored to different income scenarios—reduces to a one-size-fits-all plan.
Also, loans other than new parents will not be eligible for repayment or any other form of income-driven repayment after July 1. More on that below.
What does this mean for existing borrowers?
If you have an existing federal loan, the options vary.
IBR will remain an option for existing borrowers who do not take any additional loans after July 1, 2026. If you are already enrolled in IBR, no action is required. If you want to switch to the Legacy IBR plan, you must do so by July 1, 2028.
If you are enrolled in a rescue: On December 9, the Department of Education (ED) announced the end of the payment plan as part of a proposed joint settlement agreement with the state of Missouri. Consequently, no new borrowers will be admitted to SAIF and any pending applications will be rejected. Borrowers will have a “limited amount of time” to switch to another payment plan, Ed says.
SAFE was created in 2023 under the Biden administration and, as of Tuesday, had been frozen by court proceedings since mid-2024. all Existing Savings Loans Has been in forbearance – which means borrowers are not obligated to make payments. However, interest in loans resumed on August 1.
The savings settlement is still pending court approval, but is likely a formality at this point. The timeline is unclear as to when existing savings borrowers will need to switch to a new plan and resume payments.
As for creditors other than the current parent, there’s another wrinkle.
Loans other than parents
Federal Parent PLUS loans are designed to help parents lower the cost of college education for their dependent children. Until now, parents have been allowed to borrow at full cost for each child, and their loans are eligible for the same IDR and forgiveness options as other undergraduate loans.
The program will change significantly on July 1, also thanks to OBBB. Here’s how:
New Borrowing Limits: New parents will also come with a per-student cap on loans: $20,000 per year, $65,000 for life.
No IDR Options: Loans other than parents will not be eligible for a refinance or any other income-driven repayment plan. Similarly, they will be ineligible for Public Student Loan Forgiveness (PSLR).
What this means for new borrowers
Parents who are helping to fund (or fully fund) their children’s education may find that the new limits change the affordability equation and put some schools out of reach. Likewise, the absence of IDR options can make loans unviable or unaffordable for many families.
What does this mean for existing borrowers?
Parent Plus loans lose all IDR eligibility on July 1, 2026 – and holders of existing loans may lose existing protections If they don’t take action.
If you have debt today for someone other than a parent who finished school and want to keep your income-driven options open (and why wouldn’t you?), you need Consolidate your debts – and finalized the consolidation before July 1, 2026.
Be aware that you will need to get your application paperwork through an ED with a workforce Gutt this year. Currently, Mayotti says, it takes about 60 to 60 days to process consolidation, but that timeline could easily expand as the deadline approaches.
His advice? “I’m telling people, especially parents other than creditors, not to put their consolidation application on the safe side after February,” says Mayotti.
Graduate Loan
OBBBA has phased out Grade Plus Loans by July 1, 2026. It also places limits on direct loans for graduate education for new graduate students.
For graduate programs (such as law or medicine), the new caps are:
20,000,000 per year; Total, 000 100,000.
For professional students, The caps shall be:
50,000 per year; ,000 200,000 total.
A new lifetime limit of $7,257,500 for undergraduate and graduate loans will also be implemented next year.
The list of programs that will be designated Graduate vs. Professional is still being finalized.
What this means for new borrowers
The new limits, combined with the elimination of Grade Plus, mean that the total cost of some programs will exceed the amount that can be borrowed from federal sources after July 1. This means some students will have to consider private loans to cover the gap, or change their postgraduate plans.
What does this mean for existing borrowers?
For those who are still registered: Students enrolled in graduate or professional programs before July 1, 2026 can continue to borrow under the old rules — but only as long as they remain in the same program at the same university. New loan limits do not apply.
For those who have finished school And paying off your debts: Those currently enrolled in PAYE or ICR have until 1 July 2028 to switch to Legacy IBR (or will be automatically transferred). CAC enrollees will also be required to clear the plan, but the program is currently frozen by the courts.
What does this mean for incoming students?
Both Mewett and Austin fear the new rules will limit educational opportunities for some students. “Congress got rid of the Graduate Plus program, and significantly reduced the maximum amount that can be taken out for both graduate programs and professional programs, as well as new limits on non-parent loans,” Mayotti says.
“What this means is, some students will have to go into the private market to fill the gap,” Mayotti added. “Private loans always make me bite my nails, because private loans often have fewer repayment options when there’s a financial crisis.”
NerdWallet’s guidance is to eliminate all federal student loans and other financial aid you can get. If you still have funding gaps, consider private student loans.
More than ever, Mayotte advises students to truly budget their school expenses, including both Federal and private loansand decide if they can afford the monthly payments after they graduate.
“Even for people who are really, really good at finances, saying to yourself, ‘I’m going to have to take out $100,000 in student loans,’ is nowhere near as impactful as finding out that that’s the equivalent of $1,200 a month for 10 years,” Mayotte says. “For some reason, $100,000 is so esoteric. It doesn’t make sense. But knowing that I’m going to have to write a check every month for $1,200 — that’s what sticks.” “It gives people a sense of whether or not $100,000 is an affordable loan amount.”
