Federal Student Loan Borrowing Caps and Repayment Rules Change July 1

Major changes to federal student loan rules took effect July 1, 2026, under the 2025 One Big Beautiful Bill Act. The overhaul limits how much Americans can borrow for education and alters repayment options for millions of borrowers. The U.S.

Department of Education said the changes streamline a system that currently has seven repayment plans and address nearly $1.9 trillion in outstanding student debt. Borrowers in the Biden-era Saving on a Valuable Education plan are affected as the Trump administration winds down the program and moves participants into new options.

Payments for the roughly 7.2 million SAVE enrollees have been paused for two years.

Parent PLUS loans are now capped at $20,000 per year and $65,000 total per student. Graduate students may borrow up to $20,500 annually but face a $100,000 lifetime limit for their degree. Students in professional programs such as medicine, law, and veterinary medicine are restricted to $50,000 per year and $200,000 total.

Anyone receiving a federal student loan on or after July 1 faces a lifetime cap of $257,500 per borrower. Sarah Austin, policy analyst at the National Association of Student Financial Aid Administrators, said these are the most changes seen at this scale in a very long time.

As of April 21, 2025, 38 percent of student loan borrowers were current on payments, while 4 million were three to six months behind and 5 million were nine or more months delinquent.

In April 2025 the Department of Education announced it would resume collection enforcement on past-due loans. Required payments had resumed earlier than October 1, 2024, though credit-score penalties for late payments did not begin until that date.