Starting in 2026, the federal student loan system begins a multi-year overhaul that will reshape how students and families borrow for college and how repayment works afterward. The changes arrive in stages through 2028, affecting graduate students, parents, and future borrowers most directly. Federal Student Loan Changes Timeline
Some long-standing programmes disappear, new loan limits take effect, and repayment protections narrow for borrowers who take out loans later in the decade.
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Here’s what borrowers need to know as they plan both borrowing and student loan repayment over the next two years.
June 30, 2026: Grad PLUS Loans End
Graduate PLUS loans, long used by graduate and professional students to cover costs beyond standard federal loan caps, will stop being issued to new borrowers after June 30, 2026. Existing borrowers have a three-year grace period to continue their programme of study, but new graduate students will no longer access the programme. Instead, they will need to use Direct Graduate School Loans (a different federal student loan programme). Federal Student Loan Changes Timeline
This marks a significant shift. Grad PLUS loans have allowed students in medical, law, and other professional programmes to borrow up to the full cost of attendance, often resulting in six-figure balances. Without this option, students will need to rely on capped federal loans, institutional aid, or private student loans.
Schools may respond by adjusting prices, but students entering graduate programmes after this date should expect more constrained federal borrowing. Federal Student Loan Changes Timeline
July 1, 2026: RAP Begins
On July 1, 2026, a new federal repayment option called the Repayment Assistance Plan (RAP) goes into effect. RAP is designed to replace several existing income-driven repayment plans over time, creating a single framework for new borrowers. Federal Student Loan Changes Timeline
RAP replaces a complex discretionary income formula with a basic adjusted gross income formula for calculating the monthly payment. It also has two notable features: no negative amortisation and a $50/mo principal reduction subsidy if your monthly payment doesn’t reduce the principal by $50.
RAP will be the only income-driven repayment plan available to borrowers taking out new loans on or after July 1, 2026. Existing borrowers will still have access to IBR. Federal Student Loan Changes Timeline
July 1, 2026: New Loan Limits for Graduate and Professional Students
Also effective July 1, 2026, new borrowing caps take effect for graduate and professional students. These limits replace the open-ended borrowing once enabled by Grad PLUS loans. Federal Student Loan Changes Timeline
Notably, this is the first time that student loan limits will be based on program type, with different loan limits for graduate students versus professional students.
Students in high-cost graduate programmes may face funding gaps that did not exist for earlier cohorts.
This change places more responsibility on families and students to evaluate programme costs, expected earnings, and alternative financing before enrolling. Federal Student Loan Changes Timeline
July 1, 2026: New Loan Limits for Parent PLUS Loans
Parents borrowing through the Parent PLUS programme will also face new limits starting July 1, 2026. Like Grad PLUS, Parent PLUS loans historically allowed borrowing up to the full cost of attendance minus other aid. Federal Student Loan Changes Timeline
Under the new rules, annual and lifetime caps will apply. Parents will be able to borrow up to $20,000 per year, or $65,000 lifetime, per student.
Families accustomed to filling college cost gaps with Parent PLUS loans may need to reassess college choices, savings strategies, or payment plans offered directly by institutions. Private loans will become more attractive than Parent PLUS loans for many families.
Beyond the new caps, new Parent PLUS loan borrowers also face stricter repayment plan options—having access only to the new Standard Plan. This also means there will be no more access to Public Service Loan Forgiveness. Federal Student Loan Changes Timeline
July 1, 2027: Deferment and Forbearance Rules Tighten for New Borrowers
Beginning July 1, 2027, new federal student loan borrowers will lose access to economic hardship deferment and unemployment deferment. These options have traditionally allowed borrowers to pause payments during financial stress without entering default. Federal Student Loan Changes Timeline
For these new borrowers, forbearance will still exist but with tighter constraints. Total forbearance will be capped at nine months within any 24-month period.
The goal is for students to enrol in an income-driven repayment plan instead of going into forbearance.
Borrowers with older loans are generally unaffected, but anyone taking out new loans after this date should plan for fewer safety nets.
Late 2027 to Early 2028: Enrollment Stops for PAYE and ICR
In late 2027 or early 2028, enrolment will close for two long-standing income-driven repayment plans: Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR). This is according to a source at the student loan servicers who’s been a part of the initial logistical conversations. Federal Student Loan Changes Timeline
Borrowers already enrolled may be allowed to stay until they migrate to IBR or RAP, but no new borrowers will be able to choose these plans.
Borrowers in these plans need to plan for their eventual migration to another repayment plan.
June 30, 2028: PAYE and ICR Officially End
On June 30, 2028, PAYE and ICR formally end as federal repayment programmes. After this point, they will no longer exist within the federal loan system. The only repayment plan option for borrowers with loans prior to June 30, 2026 will be IBR and RAP.