Beginning in July 2026, students and families across the United States will face major changes to how they access and repay federal student loans. The adjustments are part of the Higher Education Affordability and Accountability Act of 2024—informally referred to as the Big Beautiful Bill—which introduces borrowing limits, removes some loan programs, and simplifies repayment structures. These updates mark a significant shift in federal student aid policy.
According to Marca, the reforms will affect new and existing borrowers differently depending on their enrollment status and degree type, though many details about implementation and institutional responses remain to be clarified.
New Caps Will Reshape Student Loan Borrowing Across Higher Education
Under the new law, graduate students will be allowed to borrow up to $20,500 per year, with a lifetime maximum of $100,000 in federal student loans. For those pursuing professional degrees, including law and medicine, the annual limit will be higher—$50,000 per year, up to a lifetime maximum of $200,000.
Parent PLUS loans, used by families to help pay for undergraduate education, will also be capped. Parents will be limited to $20,000 per year, with a total maximum of $65,000 per child. The total federal student loan borrowing limit, excluding Parent PLUS, will stand at $257,500.
Previously, borrowers could often take out loans covering the entire cost of attendance, regardless of program. Supporters of the reform argue that this unlimited borrowing model helped fuel tuition inflation and left many with unmanageable debt.
Professional and Graduate Students Will Be Most Affected by Limits
The new borrowing thresholds are expected to impact a significant share of graduate and professional students. According to an analysis by the Urban Institute:
More than half of dental students and roughly 40 percent of medical students currently borrow above the new thresholds.
This suggests a large portion of future doctors and dentists may need to seek alternative funding sources, including private loans, scholarships, or institutional aid.
Students in fine arts, public health, and social work—fields where annual tuition and living costs regularly exceed $20,500—may also find themselves constrained by the new federal student loan caps.
Parent Plus Caps Will Shift Burden for Families
The legislation also places new limits on Parent PLUS loans, which are commonly used when federal student aid packages fall short. The annual and lifetime caps will directly affect families used to bridging funding gaps through this loan program.
The Urban Institute notes:
Roughly 30 percent of families who use these loans would be affected by the new cap.
This is not a marginal shift. For middle-income families, particularly those with multiple children in college, the change may drive increased reliance on private education loans or extended payment plans.
Elimination of Graduate Plus Loans Ends Long-Standing Safety Net
A notable provision in the bill is the elimination of the Graduate PLUS loan program for new borrowers. For years, the program allowed graduate students to borrow above the Stafford limits, often serving as a crucial fallback when other financial aid was insufficient.
Beginning July 1, 2026, this option will no longer be available for incoming graduate students. A legacy provision, however, ensures that:
Those already enrolled will have up to three more years of eligibility.
This gives current graduate students a limited runway to finish their programs under the existing structure.
Repayment Plans Will Be Limited to Two Streamlined Options
The new system also reduces the number of student loan repayment options, consolidating them into just two plans:
- A revised Standard Plan with fixed payments over 10 to 25 years
- A new Repayment Assistance Plan (RAP)
RAP will adjust monthly payments to reflect 1% to 10% of a borrower’s adjusted gross income, depending on income level and household size. Any remaining balance will be forgiven after 30 years. The plan includes interest subsidies to prevent balances from growing for borrowers making low monthly payments.
Limited Grandfathering Period for Existing Borrowers
Students with federal loans originated before July 2026 will not be affected immediately. The bill includes a grandfather clause:
Current terms will remain in place for up to three academic years or until the completion of their degree, whichever comes first.
This transition period allows some flexibility for those already progressing through their studies, although any changes to program length or new enrollment after 2026 could remove that protection.
A Structural Reset With Uneven Impact
This overhaul marks one of the most extensive changes to the federal student loan system in decades. While the reforms are intended to limit excessive borrowing and slow down institutional price growth, the practical effects will vary considerably.
Students in high-cost programs, families using Parent PLUS, and those attending schools with minimal institutional aid may experience the shift as a restriction rather than a relief.
The real impact will likely become clearer as institutions adapt, students recalibrate plans, and families seek new financing strategies in the post-2026 student loan era.
