New Federal Student-Loan Caps and Repayment Plans Begin July 1 as Grad PLUS Loans End

New annual and lifetime borrowing limits for graduate students and Parent PLUS loans take effect July 1, 2026, under the One Big Beautiful Bill Act passed by Congress in 2025, nypost.com reported. Grad PLUS loans end for most new borrowers on the same date. Two new repayment plans, the Repayment Assistance Plan and the Tiered Standard Repayment Plan, also launch July 1.

The Repayment Assistance Plan bases payments on adjusted gross income and number of dependents. The Tiered Standard Repayment Plan sets fixed payments whose length depends on total loan balance. Income-Based Repayment remains available for existing borrowers.

The SAVE plan terminates July 1. The Education Department will send 90-day notices to SAVE borrowers starting that date directing them to select a new plan. PAYE and ICR plans sunset June 30, 2028. Parent PLUS loans face an annual cap of $20,000 and lifetime cap of $65,000 per dependent student for enrollment periods beginning on or after July 1, 2026.

Loans first disbursed between July 1, 2026, and June 30, 2027, carry a fixed interest rate of 9.07 percent. New Parent PLUS loans lose eligibility for income-driven repayment and Public Service Loan Forgiveness.

Professional-degree students in law, medicine, and veterinary programs face an annual cap of $50,000 and lifetime cap of $200,000. Dependent first-year undergraduates may borrow a maximum of $5,500, with a four-year maximum of $31,000, limits unchanged since 2008.

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He described the Tiered Standard plan as a hybrid of current standard and extended repayment plans. Farrington also said private graduate-loan volume may double this year and that highly qualified parents with good credit and income might find private borrowing preferable given the 9.07 percent rate and loss of income-driven options.