Federal Student Loan Borrowing Limits Tightened and Repayment Plans Reduced Starting July 1

Major changes to federal student loan rules took effect July 1, limiting how much Americans can borrow and narrowing repayment options. The overhaul was enacted under the 2025 One Big Beautiful Bill Act. The U.S.

Department of Education described the changes as a way to streamline the system and rein in nearly $1.9 trillion in outstanding debt, CBS News reported. Sarah Austin, a 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.

New borrowing limits cap Parent PLUS loans at $20,000 per year and $65,000 total per student.

Graduate students remain able to borrow up to $20,500 per year but face a new total cap of $100,000 per degree. Students in certain professional-degree fields are restricted to $50,000 per year and $200,000 total, with the Education Department adding nursing, anesthesiology, and physical therapy to the list on June 29.

New borrowers are blocked from Graduate PLUS loans as of July 1, though current borrowers are grandfathered.

Most new borrowers also face a lifetime federal student loan cap of $257,500. Beginning July 1, new federal student loan borrowers have only two repayment options: the Tiered Standard Plan and the Repayment Assistance Plan. Borrowers with existing loans who take out a new loan after July 1 must repay all federal loans under one of those two plans.

Current borrowers who do not take new loans retain access to Standard, Extended, Graduated, and Income-Based Repayment plans. The SAVE plan, which covers roughly 7.2 million borrowers whose payments have been on pause for two years, sunsets in July 2028.