Major Federal Student Loan Changes Take Effect, Impacting Borrowing Limits and Repayment Options

Significant federal student loan policy changes, enacted through the 'Working Families Tax Cut Act' and 'One Big Beautiful Bill Act,' became effective on July 1, 2026. These changes include stricter aggregate borrowing limits for graduate and professional students, the phasing out of the Grad PLUS Loan program for new borrowers, and the elimination of several repayment options, including the SAVE Plan. Borrowers are now largely restricted to the Repayment Assistance Plan (RAP) and a Tiered Standard Plan.

Context

These policy changes are part of broader legislative efforts aimed at reforming student loan systems in the United States. The 'Working Families Tax Cut Act' and 'One Big Beautiful Bill Act' were designed to address rising education costs and improve fiscal responsibility within federal student lending. The Grad PLUS Loan program has been a key option for many graduate students seeking financing.

Why it matters

The recent changes to federal student loan policies will directly affect millions of borrowers, particularly graduate and professional students. Stricter borrowing limits may limit access to necessary funds for education. The elimination of certain repayment options could increase financial pressure on borrowers as they navigate repayment strategies.

Implications

These changes may lead to increased financial strain for graduate and professional students who rely on loans to finance their education. Institutions may see a decline in enrollment as students reconsider the affordability of advanced degrees. The shift to limited repayment options could also affect borrowers' long-term financial stability and credit scores.

What to watch

As these changes take effect, it will be important to monitor how borrowers adjust to the new repayment options. Advocacy groups may respond with calls for further reforms or adjustments to the legislation. Additionally, the impact on enrollment in graduate programs could be observed as potential students weigh the new borrowing limits.