The U. S.
Department of Education implemented sweeping changes to the federal student loan system on Wednesday, July 1, 2026, introducing stricter borrowing limits and restructuring repayment options for millions of Americans.
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The overhaul stems from provisions within President Donald Trump's One Big Beautiful Bill Act, also known as the Working Families Tax Cuts Act, alongside related executive orders.
According to the Federal Student Aid office, the policy shifts affect a national student debt portfolio that totals nearly $1.7 trillion across roughly 43 million borrowers.
New Borrowing Caps and Program Eliminations
Under the new guidelines, graduate students pursuing Master's degrees face an annual borrowing cap of $20,500 and a lifetime limit of $100,000.
Professional students in programs like law or medical school are capped at $50,000 annually and $200,000 over their lifetime, while Parent PLUS loans are now limited to $20,000 annually and $65,000 total.
The administration also eliminated the Grad PLUS loan program, which previously allowed graduate students to borrow up to their total cost of attendance.
Furthermore, the Department of Education phased out the Biden-era Saving on a Valuable Education (SAVE) plan, giving its 7 million enrolled borrowers a 90-day window to transition to an alternate repayment system.
New borrowers must now choose between the Tiered Standard repayment plan, which spans 10 to 25 years based on debt volume, or the new Repayment Assistance Plan (RAP).
The RAP program sets monthly bills between 1% and 10% of a borrower's income with a $10 monthly minimum, offers a $50 reduction per dependent, and forgives remaining balances after 30 years.
