Student Loan Rules Changed July 1, 2026: New Limits and Who They Hit

The undergraduate loan limits didn’t move a dollar on July 1, 2026, which is why a lot of people assume nothing changed. Plenty did. The 2025 budget reconciliation law, widely called the One Big Beautiful Bill Act (newer Education Department documents call it the Working Families Tax Cuts Act), cut what part-time students can borrow, capped Parent PLUS, ended Grad PLUS for new borrowers and gave new loans just two repayment plans. A few details are still in court, and we flag those as we go.

The dividing line is the date a loan is first paid out. Here’s the whole change on one screen.

Before July 1, 2026, and after

The left column only describes you as long as you don’t borrow again. Take a single federal loan now and your newer rules start following your older loans too (see the section on going back with old loans). Students who were already mid-program get a temporary pass on some of the right-hand column; that’s in the graduate school section.

Part-time undergraduates: the change that’s easiest to miss

This is the one most likely to hit a working adult, because the chart a school shows you still lists the full-time amounts. Under the new rule, if you’re enrolled less than full time, your annual loan is reduced “in direct proportion” to how far below full time you are, rounded to the nearest whole percentage point. You still need at least half-time enrollment to get a federal loan at all, and the reduction applies even to students covered by the transition rules.

Schools work the exact figure out term by term, and they handle summer and mid-term schedule changes in their own systems, so use Rhea’s math to sanity-check your number, not to replace it. Also new from July 1, 2026: a school may set a lower limit of its own for everyone in a given program, as long as it applies it consistently and discloses it.

For reference, here are the full-time amounts the reduction starts from. The Education Department’s May 2026 guidance to schools confirms they didn’t change.

Most adults going back to school count as independent. Dependent students whose parents can’t get a Parent PLUS loan can generally borrow at the independent amounts. Our guide to types of financial aid shows where loans sit next to grants.

Full-time undergraduates borrowing for the first time

Your limits are the table above, untouched. What’s different is the exit: when you leave school, your loans can only go on one of two plans, RAP or Tiered Standard, both explained below. One more ceiling exists now, a $257,500 lifetime cap on everything you borrow as a student, undergraduate and graduate combined. Parent PLUS doesn’t count toward it, and loans you’ve already repaid or had forgiven do. Few undergraduates come anywhere near it, but if graduate school is in the plan, it’s there.

Parents borrowing for a child

Parent PLUS used to stretch to the school’s full cost of attendance minus other aid, with no total cap. For new borrowing it’s $20,000 a year and $65,000 in total, and the cap belongs to the student, not the parent. Two parents borrowing for the same child share one $20,000 annual limit, and Parent PLUS already borrowed for that student at any school counts toward the $65,000.

At the maximum, a family runs out partway through the fourth year: $20,000 times 3 is $60,000, which leaves $5,000. The $20,000 is also limited by what the student still needs after other aid.

Parent PLUS loans can’t use RAP. Federal servicer guidance says Parent PLUS loans first disbursed on or after July 1, 2026 are repaid on the Tiered Standard Plan.

Graduate and professional students

Grad PLUS, which let graduate students borrow up to the full cost of attendance, ended on July 1, 2026 for anyone who doesn’t qualify for the transition rule. In its place:

• Graduate students: $20,500 a year, $100,000 total.
• Professional students: $50,000 a year, $200,000 total.

Which programs count as “professional” is being fought over in court. A federal court order on June 24, 2026 paused part of the Department’s definition, and the Department is temporarily using a list that includes fields such as medicine, law, dentistry, pharmacy, and some nursing and therapy degrees. That list could change. If the gap between $20,500 and $50,000 a year decides whether you can afford a program, get the school’s classification in writing before you enroll, and ask how its students cover costs above the federal cap.

The interim exception. You keep the old limits for a while if you were enrolled in the program as of June 30, 2026 and received a Direct Loan for that program before July 1, 2026 (it didn’t have to be Grad PLUS). It lasts the lesser of three academic years or the time left in your program, and ends early if you finish, withdraw or switch programs. Qualifying borrowers can’t opt out, and parents of qualifying students get the same treatment for Parent PLUS.

Anyone with a new loan: RAP or Tiered Standard

If all your loans were disbursed on or after July 1, 2026, you choose between a fixed payment and a payment based on income.

Tiered Standard sets a fixed payment, and the length depends on how much you owe: under $25,000, 10 years; $25,000 to under $50,000, 15 years; $50,000 to under $100,000, 20 years; $100,000 or more, 25 years. Servicer guidance puts the minimum at $50 a month. A longer term means a lower payment and more total interest.

The Repayment Assistance Plan (RAP) ignores your balance. Your payment is a percentage of your adjusted gross income (AGI, the income figure on your federal tax return). It starts at 1% and rises one point for each additional $10,000 of AGI above $10,000, topping out at 10% above $100,000. At $10,000 or less, the payment is $120 a year. Then subtract $50 a month for each dependent you claim; the payment can’t go below $10 a month. Whatever is left after 30 years of qualifying payments is forgiven, and the forgiven amount may be taxable.

Two things RAP does that the older income-driven plans didn’t. If your payment doesn’t cover the month’s interest, the unpaid interest isn’t added to your balance. And if an on-time payment cuts your principal by less than $50, the Department adds a matching principal payment of up to $50. RAP payments can count toward Public Service Loan Forgiveness if you meet that program’s other rules.

Our rough rule: if your income is low or unpredictable compared with what you owe, RAP will usually give the lower payment. If you can comfortably afford the fixed payment, Tiered Standard on a short term usually costs less in total. Run both in the Loan Simulator on StudentAid.gov before you pick.

Already repaying, including anyone who was on SAVE

If every loan you have was disbursed before July 1, 2026 and you don’t borrow again, most of your options are still there, with three exceptions.

• SAVE is over. A federal court order ended it. Servicers began sending notices in July 2026, giving borrowers 90 days from their notice to choose a new plan; servicer guidance says anyone who doesn’t choose is moved to a standard plan. If you were on SAVE and haven’t picked, log in to StudentAid.gov or call your servicer now, because some early deadlines have already passed.
• PAYE and ICR are closing no later than July 1, 2028. If you’re on one, you’ll need another plan, such as IBR or RAP, before then.
• IBR stays, and RAP opens up for most Direct Loans disbursed before July 1, 2026.

The 1% auto pay discount in the table is the one change that helps nearly everyone in repayment. If you can reliably cover the payment, it costs nothing to set up through your servicer.

Going back to school with old loans

This is the trap in the table. Federal servicer guidance says that once you have a loan first disbursed on or after July 1, 2026, RAP becomes your only income-driven plan, and the older Standard, Graduated and Extended plans stop being available to you. A Direct Consolidation Loan made on or after July 1, 2026 is likewise limited to RAP or Tiered Standard. If you’re on IBR and happy there, ask your servicer what a new loan would do before you accept one. We’d want that answer in writing.

Still unsettled

• Fewer pause options for future loans. The Department’s rulemaking documents say that for loans disbursed on or after July 1, 2027, unemployment and economic hardship deferments end and forbearance is limited to 9 months in any 24-month period. That’s about future loans, not ones you have now. Watch for final details.
• The professional-degree list, which depends on the court case.
• The PAYE and ICR wind-down, which servicers will announce plan by plan.

Two questions to send before you accept a loan

Then line the answer up against your bill. Our guide to reading a financial aid offer shows where loan amounts appear, questions before borrowing helps decide whether to take the loan at all, and the cost estimator shows what a balance could cost each month.

Whatever row of the table you started in, one new loan can move you to the other column, so ask first and sign second.