Federal Student Loan Landscape Undergoes Major Changes Effective July 1, 2026, with Ongoing Litigation

Significant reforms to federal student aid, enacted under the 'One Big Beautiful Bill Act' (also known as the Working Families Tax Cuts Act), took effect on July 1, 2026. These changes include updated FAFSA rules, revised Pell Grant eligibility criteria, the phasing out of most income-driven repayment (IDR) plans in favor of a new Repayment Assistance Plan (RAP), and the elimination of Grad PLUS loans for new borrowers with new annual and aggregate loan caps. Litigation is ongoing, with a coalition of states challenging the Department of Education's RISE Final Rule regarding the definition of 'professional degree' programs for federal loan purposes.