New Federal Student Loan Rules Take Effect July 1

Federal student loan rules change on July 1, 2026, ending the Saving on a Valuable Education repayment plan and introducing two new repayment plans along with new borrowing limits. The changes stem from the One Big Beautiful Bill Act passed last year.

More than 7 million borrowers currently enrolled in SAVE will receive notices from their loan servicers and have roughly 90 days to select a new plan or face automatic enrollment in a standard repayment plan.

Borrowers with loans issued before July 1 who do not plan to borrow again can choose from several existing plans. These include the Standard Repayment Plan, Graduated Repayment Plan, Extended Repayment Plan, Income-Based Repayment, Income-Contingent Repayment, and Pay As You Earn.

A new Repayment Assistance Plan also becomes available July 1. It bases payments on adjusted gross income, waives interest above the monthly payment amount, and provides principal-matching payments for lower-income borrowers. Forgiveness under this plan requires 30 years of repayment.

Borrowers taking out loans on or after July 1 will be restricted to the two new repayment plans created by the legislation. The Education Department has not yet detailed the exact terms of those two plans in the available reporting. About 43 million Americans hold roughly $1.7 trillion in federal student loans.

Borrowers can use the department's Loan Simulator to compare options before the July 1 deadline.