Federal student loan repayment plans change July 1

Several federal student loan repayment plans will end or close to new borrowers on July 1. Borrowers currently enrolled in affected plans have until that date to switch or consolidate. The changes stem from a tax and spending package passed last July. The package eliminated some repayment plans, introduced new ones, and added new loan limits.

Borrowers still enrolled will be contacted by their loan servicers around July 1 and transitioned to a new plan within 90 days. Approximately 7.5 million borrowers were enrolled in that plan.

Borrowers with existing loans may continue under legacy limits for up to three additional academic years. New direct unsubsidized loans for graduate students will be capped at $20,500 per year and $100,000 total for standard programs. Professional programs such as medical, dental, and law degrees will have higher caps of $50,000 annually and $200,000 aggregate.

Parent PLUS loans will be capped at $20,000 per year and $65,000 lifetime per dependent. Parents must consolidate existing Parent PLUS loans into a Direct Consolidation Loan before July 1 to keep access to income-driven repayment and public service loan forgiveness.