Recent updates to student loan policies have a significant impact on borrowers. Whether you’re a student, parent, or graduate managing loans, it’s essential to stay informed about the new rules. These updates introduce new borrowing limits, repayment plans, and conditions that could affect your financial future.
Key changes in student loan borrowing limits
The “One Big Beautiful Bill” (OBBB), passed in July 2025, changes federal student loan borrowing limits. Starting in 2026, graduate students can borrow up to $20,500 annually in unsubsidized loans, with a $100,000 total borrowing cap. Professional students can borrow up to $50,000 annually, capped at $200,000.
For parents borrowing through Parent PLUS, the annual limit will be $20,000, with a lifetime cap of $65,000. These changes aim to curb excessive borrowing and align loans more closely with students’ financial needs.
New repayment plans
Two repayment options will be available starting in 2026: a fixed repayment plan and the Repayment Assistance Plan (RAP). RAP extends loan forgiveness to 30 years, and payments count toward Public Service Loan Forgiveness (PSLF) if eligibility requirements are met. If you work in qualifying public service jobs, this can reduce your repayment burden.
Resumption of interest accrual
In August 2025, federal student loans will resume accruing interest for borrowers enrolled in the Saving on a Valuable Education (SAVE) plan, following a court injunction. This change could impact your loan balance over time. The SAVE plan is expected to phase out by 2028.
Impact on colleges and universities
With rising default rates, colleges and universities are under greater scrutiny. Schools with default rates exceeding 30% for three consecutive years or 40% in one year risk losing federal aid programs. This new measure encourages schools to offer programs that lead to employment opportunities and loan repayment.
Staying informed about these updates will help you make better financial decisions regarding your loans.
