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New Federal Student Loan Caps and Pell Grant Changes Take Effect in 2026 Under One Big Beautiful Bill Act
The law signed by President Trump in 2025 limits borrowing amounts and repayment choices for new and existing federal student loans. Roughly 7.2 million SAVE plan borrowers will select new repayment options by late 2026.
Jun 1, 3:09 PM·2m read1 source
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The One Big Beautiful Bill Act, signed into law by President Trump in 2025, imposes new annual and lifetime caps on federal student loans beginning July 1, 2026. Parent PLUS borrowers will be limited to $20,000 per year and $65,000 total per student. Graduate students face a $20,500 annual cap and a $100,000 total cap per degree.
Students in professional programs such as medicine, law, pharmacy, veterinary medicine, chiropractic, optometry, osteopathic medicine, podiatry, theology and clinical psychology will be restricted to $50,000 per year and $200,000 total. New borrowers after July 1, 2026, will lose access to Graduate PLUS loans. Current Grad PLUS borrowers will retain eligibility.
The Education Department stated that anyone receiving a federal loan on or after that date will face a lifetime cap of $257,500, excluding a few carveouts. Winston Berkman-Breen, legal director of Protect Borrowers, said the limit applies per borrower across undergraduate and graduate programs.
The Education Department reported that 95% of nursing students will not be affected by the borrowing caps.
9 trillion in outstanding student debt, according to LendingTree. New borrowers will have only two repayment options: the Tiered Standard Plan and the Repayment Assistance Plan. Borrowers who already hold loans and take out an additional loan after July 1, 2026, must repay all federal loans under one of the two new plans once repayment begins.
Current borrowers who do not take new loans may continue using the Standard, Extended, Graduated, Income-Based Repayment, Pay As You Earn, and Income-Contingent Repayment plans. The One Big Beautiful Bill Act phases out the Pay As You Earn and Income-Contingent Repayment plans by July 1, 2028. Borrowers enrolled in those plans must switch to another option by that date.
