What changed for federal student loans in 2025

🎯 In 30 seconds: The July 2025 budget law (Public Law 119-21, first known as the One Big Beautiful Bill Act and now called the Working Families Tax Cuts Act by the Education Department) rewrote federal student loans starting July 1, 2026. Undergraduate limits did not change. Parent PLUS is now capped, Grad PLUS is closed to new borrowers, graduate borrowing is capped, and anyone with a new loan picks between two repayment plans. Separately, a court ended the SAVE plan in March 2026.

The changes at a glance

Item	Before July 1, 2026	From July 1, 2026
Dependent undergraduate Direct Loans	$5,500 / $6,500 / $7,500 a year; $31,000 total	Unchanged
Independent undergraduate	$9,500 / $10,500 / $12,500 a year; $57,500 total	Unchanged
Parent PLUS	Up to cost of attendance minus other aid	$20,000 a year and $65,000 total per student
Graduate students	$20,500 a year, plus Grad PLUS up to cost	$20,500 a year, $100,000 total, no Grad PLUS
Professional students (law, medicine, dentistry, pharmacy and others on a federal list)	Same as graduate	$50,000 a year, $200,000 total
Lifetime cap on a student’s own federal loans	None	$257,500 (Parent PLUS for a child doesn’t count)
Part-time students	Full annual limit possible	Annual limit cut in proportion to enrollment, from 2026–27
School-set limits	Not allowed	A school may set lower limits for a program if it applies them to everyone in it
Repayment plans for new loans	Standard, graduated, extended and several income-driven plans	Tiered Standard or the Repayment Assistance Plan (RAP)
Deferment and forbearance	Up to 3 years each of unemployment and economic hardship deferment	For loans made from July 1, 2027: neither deferment, and forbearance limited to 9 months in any 24

The caps count every dollar ever borrowed, even if it was later repaid or forgiven. Money a student hands back soon after it arrives does not count. The $65,000 Parent PLUS cap is per student and includes borrowing at earlier schools.

Who keeps the old rules

There is a temporary exception. If a student was enrolled in a program on June 30, 2026, and a Direct Loan had been made for that program before July 1, 2026, the old limits continue (including Grad PLUS and uncapped Parent PLUS). They last for the shorter of three academic years or the time left in the program. Changing majors inside the same degree keeps the exception. Leaving the program or withdrawing ends it.

What it means for a student starting now

Worked example. Dana is a dependent freshman in fall 2026. Her in-state university costs $34,000 a year. She has $6,000 in grants and her family can pay $8,000 a year, which leaves a $20,000 gap each year. Her own Direct Loans over four years can total $5,500 + $6,500 + $7,500 + $7,500 = $27,000. After her loans, the yearly gaps are $14,500, $13,500, $12,500 and $12,500, or $53,000 in total. That fits under the Parent PLUS limits of $20,000 a year and $65,000 total.

Now move Dana to a private college where the gap after her own loan is $30,000 a year. Parent PLUS can cover $20,000 in each of the first three years and only $5,000 in year four before the $65,000 cap. That leaves $55,000 the family must find elsewhere. Before July 2026 the parents could have borrowed all of it. Now the choice is a cheaper school, more grant aid, or private loans. The Paying for College page covers the order to look for money.

Repayment: two plans for new borrowing

Tiered Standard: fixed payments over 10, 15, 20 or 25 years depending on how much you owe. If you don’t choose, this is where you land.
RAP: a payment of 1% to 10% of adjusted gross income (minimum $10 a month), less $50 for each dependent. Unpaid interest on an on-time payment is waived, and forgiveness comes after 30 years of qualifying payments.
Parent PLUS loans made from July 1, 2026 can only use Tiered Standard.
Taking a new loan on or after July 1, 2026, including a new consolidation loan, can narrow the plans open to your older loans too. If your older loans are on an income-driven plan, ask your servicer before borrowing again.

Other changes worth knowing

SAVE is gone. A federal court order ended the SAVE plan on March 10, 2026. Servicers began sending notices in July 2026, with 90 days to pick a new plan. Borrowers who don’t choose are placed in a standard or Tiered Standard plan.
Autopay discount, temporarily larger. From July 1, 2026 to June 30, 2028, borrowers with Direct Loans disbursed on or after July 1, 2012 who are enrolled in autopay get a 1 percentage point rate cut instead of 0.25. The enrollment deadline is December 31, 2026.
Pell Grants. The 2026–27 maximum is $7,395. Students with a Student Aid Index of $14,790 or more (twice the maximum) cannot get a Pell Grant.
Taxes on forgiveness. The temporary federal tax break on income-driven forgiveness ended after 2025. Public Service Loan Forgiveness is still tax-free.

Check yourself

Did undergraduate Direct Loan limits change in 2026? Answer: No.
What are the new Parent PLUS limits? Answer: $20,000 a year and $65,000 total per student.
Which two plans can a borrower with a loan made after June 30, 2026 choose? Answer: Tiered Standard and RAP.
Who keeps Grad PLUS? Answer: Students enrolled in a program on June 30, 2026 who had a Direct Loan for it before July 1, 2026, for up to three academic years.

🏛️ What changed for federal student loans in 2025–2026