Student Loan Caps, Repayment Overhaul, and Pell Grant Changes Take Effect July 1, 2026

New annual and lifetime caps on federal student loans take effect July 1, 2026, under the One Big Beautiful Bill Act signed into law by President Trump in 2025. Parent PLUS borrowers will be limited to $20,000 per year and $65,000 total per student. Graduate students will face a $20,500 annual cap and a $100,000 total cap per degree.

Professional degree students in pharmacy, veterinary medicine, chiropractic, law, medicine, optometry, osteopathic medicine, podiatry, theology, and clinical psychology will be restricted to $50,000 per year and $200,000 total. New borrowers will be blocked from Graduate PLUS loans beginning July 1, 2026, while current Grad PLUS borrowers will retain access.

Anyone receiving a federal student loan on or after July 1 will face a lifetime cap of $257,500, aside from limited carveouts.

The Education Department has stated that 95 percent of nursing students will not be affected by the new borrowing limits. New borrowers after July 1 will have only two repayment options: the Tiered Standard Plan and the Repayment Assistance Plan. Borrowers with existing loans who take out a new federal loan after July 1 must repay all federal loans under one of those two plans once repayment begins.

Current borrowers who do not take out new loans can continue using the Standard Repayment Plan, Extended Repayment Plan, Graduated Repayment Plan, or Income-Based Repayment. The One Big Beautiful Bill Act phases out the PAYE and ICR plans by July 1, 2028. The SAVE plan will sunset in July 2028.

2 million SAVE enrollees on or around July 1, 2026, that they must select a new plan within 90 days. If borrowers take no action, servicers will place them in the standard repayment plan. Pell Grant eligibility will also change July 1.

Students receiving non-federal grants or scholarships that meet or exceed their cost of attendance will no longer qualify for Pell Grants. The law closes the so-called Pellionaire loophole that allowed low-income but high-asset individuals to receive grants. Borrowers report assets including cash, savings, checking, business net worth, and investment net worth on the FAFSA.

The same legislation expands Pell Grant eligibility to shorter-term workforce training programs in fields such as nursing assistance, early childhood education, and automotive mechanics. Previously, programs generally had to last at least 15 weeks and include 600 clock hours to qualify.

The Education Department said students will be able to receive Pell Grants for high-quality, short-term programs that prepare them for high-skill, high-wage, and in-demand jobs.

The student loan system currently consists of seven repayment plans. S. 9 trillion, according to LendingTree. 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.

Gov accounts.