2026 Student Loan Repayment Changes: What Borrowers Can Expect

Published: November 23, 2025

Borrowers of federal student loans are entering a major shift starting July 1, 2026, as new rules under the One Big Beautiful Bill Act (OBBBA) begin to reshape repayment.

If you have loans now or will borrow in the future, you need to understand the five biggest changes because they will affect your payment amount, forgiveness eligibility, and plan options.

1. Repayment Plan Options Drastically Reduced

Under the new rules, if you take out any federal student loan on or after July 1, 2026, you will only have access to two plans:

• The New Standard Repayment Plan (10-year fixed).
• The Repayment Assistance Plan (RAP) (Income-driven).

Important: Existing plans like SAVE, PAYE, and ICR will be eliminated for new borrowers. Current borrowers with loans before that date have until June 30, 2028 to remain in or switch to older plans.

2. Introduction of RAP – A Plan with Unique Subsidies

The new Repayment Assistance Plan (RAP) is designed to simplify the system, but it comes with stricter terms than the old SAVE plan.

• Minimum Payment: Payments can be as low as $10 per month (no more $0 payments for most).
• Principal Subsidy: If your monthly payment isn’t enough to lower your principal by at least $50, the government provides a subsidy to ensure your balance drops by that amount.
• Forgiveness Timeline: RAP pays off remaining debt after 30 years (increased from the 20 or 25 years under older plans).

3. Borrowing Caps and Elimination of Graduate PLUS Loans

For loans disbursed July 1, 2026 onward, the “unlimited” borrowing of the past is ending.

• Graduate PLUS Eliminated: The Graduate PLUS loan program will be discontinued for new borrowers.
• Strict Caps: Graduate students will face annual limits (e.g., $20,500/year for most masters, $50,000/year for medical/law professional degrees).

4. Parent PLUS Consolidation “Loophole” Closing

This is the most urgent deadline for parents. Parent PLUS borrowers lose access to income-driven repayment plans unless they take action.

• The Rule: You must consolidate your Parent PLUS loans before July 1, 2026.
• The Benefit: Consolidating before this date preserves your access to the Income-Contingent Repayment (ICR) or potentially the IBR plan before they are closed off.

5. PSLF Eligibility Expanded (But Watch the Transition)

The new RAP plan will be eligible for the Public Service Loan Forgiveness (PSLF) program.

• The Risk: Borrowers on legacy plans (like PAYE) must ensure they enroll in the correct plan during the transition period to avoid losing credit.
• Action Item: If you work in public service, download your employment certification history now before the system migration begins.

Key Dates You Can’t Ignore

• July 1, 2026: New repayment rules apply to all new loans.
• July 1, 2026: Deadline for Parent PLUS consolidation to save IDR options.
• June 30, 2028: Final deadline for legacy borrowers to switch plans before being auto-enrolled in RAP.

What Borrowers Should Do Now

• Check Disbursement Dates: Log into your loan servicer dashboard. If your first disbursement is on or after July 1, 2026, plan for RAP.
• Consolidate Parent PLUS: If you have these loans, consolidate immediately to beat the 2026 cutoff.
• Budget for Change: Run the loan simulator to see how a switch to RAP (with its $10 minimum and 30-year timeline) compares to your current SAVE plan.

Final Takeaway

The student-loan repayment system entering 2026 will look very different from today. Fewer plan choices, new rules, and stricter borrowing limits will hit new borrowers hardest but existing borrowers aren’t off the hook either. Getting ahead now, understanding your timelines, and optimizing your strategy will be the difference between keeping control and getting blindsided.