The Grad PLUS loan program is dead for new borrowers, Parent PLUS loans now cap out at $20,000 a year per kid instead of being unlimited, there's a new $257,500 lifetime cap on federal student debt, and roughly 7.5 million people on the SAVE plan are starting to get letters telling them to pick a new repayment plan within 90 days.
Four days ago, the largest rewrite of the federal student loan system in a generation stopped being a future headline and became active policy. The One Big Beautiful Bill Act, signed almost exactly a year earlier, took effect on Wednesday and touched nearly every part of how Washington lends money for college: who can borrow, how much, and how they pay it back. None of it retroactively changes a loan you already hold — but if you're borrowing for the first time this fall, or you're parked in the SAVE plan, the ground under you just moved.
What happened to the SAVE plan?
It's over. SAVE, the Biden-era income-driven repayment plan, was struck down in court and separately killed off by the new law, and its roughly 7.5 million enrollees are now getting 90-day notices from their loan servicers telling them to pick a new plan. Interest on SAVE balances has technically been accruing since August 1, 2025, even though payments were paused. The Department of Education has said the notices are going out in waves rather than all at once, so if you're on SAVE and haven't heard anything yet, that doesn't mean you're exempt — it just means your wave hasn't landed.
How much can you actually borrow now?
Less, in most cases, if you're a new borrower. Grad PLUS loans — which let graduate students borrow up to the full cost of attendance with essentially no underwriting — are gone for anyone without an existing loan in that program before July 1. Students already enrolled and borrowing before the cutoff keep the old terms for up to three more years, or until they finish, as long as they stay in the same program at the same school. New graduate and professional borrowers are now capped at $20,500 a year ($100,000 lifetime) for grad school and $50,000 a year ($200,000 lifetime) for professional degrees like law or medicine.
Parent PLUS loans took a similar hit. They used to have no cap at all — parents could borrow whatever it took to cover the gap between financial aid and the tuition bill. Now it's $20,000 a year and $65,000 total per child, with the same three-year grandfather clause for parents who already borrowed before July 1. On top of all that, there's a new overall lifetime limit of $257,500 in federal loans for anyone (Parent PLUS aside).
Grad PLUS letting people borrow the sticker price with zero underwriting was arguably the least disciplined lending product the federal government ran, and it's a big part of why some graduate programs kept raising tuition without much resistance. Killing it isn't the crazy part. Capping Parent PLUS the same way is what actually lands hardest — that program was the gap-filler for families who'd already committed to a fall tuition bill assuming the old rules would hold.
What repayment plans are left?
If your loan is first disbursed on or after July 1, 2026, you get exactly two choices: the Tiered Standard Plan or the new Repayment Assistance Plan (RAP). The Tiered Standard Plan is a fixed-payment plan where the length of your term scales with how much you owe.
| Balance owed | Repayment term |
|---|---|
| Under $25,000 | 10 years |
| $25,000–$49,999 | 15 years |
| $50,000–$99,999 | 20 years |
| $100,000 or more | 25 years |
RAP is the new income-driven option, and its main selling point is smaller payments tied to income. The catch is a 30-year timeline before any remaining balance gets forgiven — five to ten years longer than the 20- or 25-year terms borrowers are used to under IBR. Current borrowers who don't take out any new loans after July 1 keep access to the old Standard, IBR, Graduated, and Extended plans, and can also opt into RAP if it works better for them. Anyone currently on PAYE or ICR has until July 1, 2028, to move to an eligible plan — that deadline isn't optional. SAVE borrowers don't get that long: their transition is already running on the 90-day clock described above, separate from the 2028 sunset that applies to PAYE and ICR.
What this means for you
If you already have federal loans and aren't borrowing anything new, day-to-day very little changes — unless you're one of the millions being pushed off SAVE, in which case the 90-day clock is the thing to actually pay attention to. If you're a parent or a grad student planning to take out a new loan for the fall semester, the math changed twice over: less room to borrow, and fewer repayment options once you do. Public Service Loan Forgiveness, for what it's worth, wasn't touched by any of this.
Washington rarely unwinds a loan program once people have built their finances around it. This one got gutted in under a year. Worth remembering next time someone tells you a federal benefit is permanent.
Paying down student debt on freelance income?
See what you actually take home after taxes and platform fees, so you know what's really left over for debt payments each month.
Try the Calculator →