Interest on the SAVE plan resumes August 2025. While payments under SAVE may still be paused, your balance will grow—and with the “Big Beautiful Bill” now passed, SAVE is being eliminated. You’ll likely need to switch plans soon. Collections have also resumed on defaulted loans. Register for a webinar to learn more.

Home » Student Aid Is Changing in 2026 — Here’s What You Need To Know

Student Aid Is Changing in 2026 — Here’s What You Need To Know

On July 4, 2025, the president signed H.R.1 into law, known as the Big Beautiful Bill, bringing major changes to student aid programs.

New Borrowing Rules and Limits Take Effect July 1, 2026

Graduate PLUS loans will be eliminated, and new federal borrowing limits for graduate and professional students will take effect. Borrowers who have existing Graduate PLUS loans or loan balances before this date will have a 3-year grandfather period to borrow under the old rules. Below, we outline the key changes and provide tailored guidance for different types of borrowers.

Curious about changes to student loan repayment plans for when you finish school and enter repayment? Click here to learn how relief and repayment options are evolving now and over the next three years.

Loan Limits by Borrower Type

Direct Subsidized and Unsubsidized Loans: No change.

  • Annual cap: Varies based on grade levels. Learn more here.
  • Lifetime cap: $31,000 for dependent students

Parent PLUS Loans:

  • Annual cap: $20,000
  • Lifetime cap: $65,000 per child (shared between both parents)
  • Important Exception: Borrowers who received a Grad PLUS loan before July 1, 2026, may continue borrowing under that program for up to three additional years to finish their current program.

Important Exception: Parents who took out a Parent PLUS loan before July 1, 2026, may continue borrowing for up to the Cost of Attendance for three additional years to finish their current program.

Direct Unsubsidized Loans for Advanced Degree Programs (Master’s, PhD):

  • Annual cap: $20,500
  • Lifetime cap: $100,000

Direct Unsubsidized Loans for Professional Degree Programs (e.g., law, medicine):

  • Annual cap: $50,000
  • Lifetime cap: $200,000

Phased out starting July 1, 2026.

Important Exception: Borrowers who received a Grad PLUS loan before July 1, 2026, may continue borrowing under that program for up to three additional years to finish their current program.

Tailored Guidance by Borrower Group

  • Start financial planning early. Apply to as many schools as you’d like but be sure to include affordable in-state and local options, especially at least one you can commute to, if necessary.
  • Estimate your net cost. Use a college cost estimator to understand what you’ll actually pay after financial aid. Review both annual and lifetime federal loan limits. As a dependent student, the total amount of federal student debt you can borrower for your degree is capped at $31,000, and eligibility is based on financial need.
  • Understand Parent PLUS loan limits. If your family plans to use Parent PLUS loans, be aware that borrowing is capped at $20,000 per year, with a lifetime maximum of $65,000 per dependent child after July 1, 2026.
  • Compare Financial Aid Award letters carefully. Calculate your net cost (Cost of Attendance minus grants and scholarships). This is the amount you’ll need to cover through savings, family contributions, or loans. Avoid private loans whenever possible, as they often come with higher interest rates and fewer protections.

Starting July 1, 2026, any new Parent PLUS loans:

  • Will be limited to $20,000 per year, with a $65,000 lifetime cap per child.
  • Will not be eligible for income-driven repayment plans or Public Service Loan Forgiveness (PSLF).
  • Must be repaid under the Standard Repayment Plan.

Caution: If a parent with existing Parent PLUS loans takes out a new loan on or after July 1, 2026, all Parent PLUS loans, including those previously in an Income Driven Repayment plan, will be moved to the Standard Repayment Plan. This may also result in the loss of progress toward loan forgiveness programs, like Public Service Loan Forgiveness.

If you’re currently enrolled in graduate school and have already taken out a Grad PLUS loan before July 1, 2026, you may continue to borrow additional Grad PLUS loans for up to three more years to complete your current program of study.

What to do:

  • Confirm the disbursement date of your most recent Grad PLUS loan to ensure eligibility.
  • Make a plan to finish your program within the three-year window, as you will lose access to Grad PLUS funding beyond that timeframe.
  • If you expect to need additional funding beyond the Grad PLUS window, talk to your financial aid office now about other aid options.

Grad PLUS loans will no longer be available. You’ll be limited to:

  • $20,500/year (lifetime max $100,000) for Master’s programs
  • $50,000/year (lifetime max $200,000) for professional degrees

Important: Schools may recommend private loans to fill funding gaps, but these come with significant downsides:

  • No income-driven repayment or forgiveness options
  • Interest accrues immediately, often at higher variable rates
  • Typically require a co-signer and credit check
  • Fewer deferment/forbearance protections

What to do instead:

  • Apply widely and request detailed cost-of-attendance breakdowns.
  • Seek scholarships, fellowships, or assistantships to reduce tuition.
  • Build a realistic budget before enrolling and prioritize programs that don’t require private loans.
  • Research loan forgiveness options tied to public service or specific career paths.

Need Help Navigating These Changes?

Schedule a 1:1 appointment with a certified student loan counselor.

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FAQs

A: No changes to Subsidized and Unsubsidized loans. The lifetime limit for dependent students remains $31,000. Review annual and lifetime caps here.

A: Starting July 1, 2026:

  • Annual cap: $20,000
  • Lifetime cap: $65,000 per child
  • Repayment must be under the Standard Plan only (no IDR or PSLF eligibility)

A: All Parent PLUS loans, including older ones—will be moved to the Standard Plan. You’ll lose any progress toward forgiveness programs like PSLF.

A:

Direct Unsubsidized Loans for Professional degrees (e.g., law, medicine): $50,000/year (lifetime max: $200,000)

Direct Unsubsidized Loans for Master’s programs: $20,500/year (lifetime max: $100,000)

A: Grad PLUS loans will be eliminated after July 1, 2026.

Exception: If you took out a Grad PLUS loan before that date, you may continue borrowing for up to 3 more years to complete your program.

A:

  • Compare financial aid offers carefully.
  • Apply to multiple schools, including affordable in-state options.
  • Use net price calculators to understand real costs.
  • Know the federal loan caps and avoid private loans whenever possible.

A:

  • Talk to your financial aid office about other aid if you need more time.
  • Check your loan disbursement dates.
  • Make a plan to complete your program within the 3-year grace period.
  • You won’t have access to Grad PLUS loans.
  • Be cautious with private loans, they offer fewer protections and no forgiveness.
  • Look for scholarships, fellowships, and assistantships instead.

A: All of your loans must be repaid under the new repayment rules, either RAP or the Standard Plan. If you take both student debt for yourself and Parent Plus loans, you can pay your student loans in the RAP plan but your Parent Plus loans must be paid in the Standard Plan.

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