Federal Student Loan Reforms Lead to Increased Defaults

Significant federal student loan changes, effective July 1, 2026, have eliminated Graduate PLUS loans for new borrowers and imposed new annual and lifetime limits on Unsubsidized Direct Loans. Additionally, new limits are in place for Parent PLUS loans, and borrowers previously on the SAVE plan must now choose a new income-driven plan or face automatic enrollment in a Standard Repayment Plan. These reforms, enacted through the One Big Beautiful Bill Act, are reportedly contributing to a nationwide surge in student loan defaults.