One Big Beautiful Bill Act

The federal Graduate PLUS Loan program - which currently allows graduate students to borrow up to the full cost of attendance for their program of study - will be discontinued for new borrowers who begin classes on or after July 1, 2026. 

Legacy Provision: If a student has borrowed a Direct Loan that disbursed before July 1, 2026, while enrolled in a credentialed program of study, the student can continue to borrow from the Graduate PLUS Loan program for up to 3 academic years or until the end of their program of study, whichever comes first.

Students who have not received a Direct Unsubsidized Loan disbursement before July 1, 2026, will be subject to the following new Direct Unsubsidized Loan limits:

• Graduate Students: $20,500 annual; $100,000 aggregate (Includes PA, MSN, and DNP programs)
• Professional Students*: $50,000 annual: $200,000 aggregate 
• Borrowers who are both graduate and professional students at some point in their educational careers may only borrow up to $200,000 in total for graduate and professional school

Legacy Provision: If a student has a Direct Unsubsidized Loan disbursed before July 1, 2026, while enrolled in a credentialed program of study, the student can continue to borrow under the current loan limits for up to 3 academic years or until the end of their program of study, whichever comes first. 

*According to the current definition contained in the regulations for Institutional Eligibility under the Higher Education Act of 1965, a professional degree is: 
A degree that signifies both completion of the academic requirements for beginning practice in a given profession and a level of professional skill beyond that normally required for a bachelor's degree.

Examples of a professional degree include but are not limited to:

• Pharmacy (Pharm.D.)
• Dentistry (D.D.S. or D.M.D.)
• Veterinary Medicine (D.V.M.)
• Chiropractic (D.C. or D.C.M.)
• Law (L.L.B. or J.D.)
• Medicine (M.D.)
• Optometry (O.D.)
• Osteopathic Medicine (D.O.)
• Podiatry (D.P.M., D.P., or Pod.D.)
• Theology (M.Div., or M.H.L.)
• Clinical Psychology (Psy.D. or Ph.D.)

Beginning July 1, 2026, parents will only be permitted to borrow up to $20,000 per year per dependent student and a $65,000 aggregate limit per dependent student. These limits apply to all parents of a student, so the maximum amount a student may receive in a year is $20,000, with an aggregate limit across all years of $65,000, regardless of whether one or more parents are borrowing on the student’s behalf. This is a change from the current law, which allows parents to borrow up to the full cost of attendance per child. 

Legacy Provision:  If a student has a Direct Loan or the parent borrowed a Parent PLUS Loan that disbursed before July 1, 2026, while the dependent student is enrolled in a credentialed program of study, the parent can continue to borrow from the Parent PLUS Loan program for up to 3 academic years or until their dependent student reaches the end of their program of study, whichever comes first.

The bill places a $257,500 lifetime borrowing limit on all federal student loans, excluding borrowed Parent PLUS loan amounts (in the case of a dependent student who had Parent PLUS borrowed on their behalf for education expenses). 

Legacy Provision: If a borrower has a Federal Direct Loan made before July 1, 2026, while enrolled in a credentialed program of study, the borrower can continue to borrow under current loan limits for up to 3 academic years or until the end of their program of study, whichever comes first. 

**You may lose legacy status if you:

• Take a leave of absence
• Withdraw from a term
• Break enrollment in the same program at the same institution
• Change degree program outside your current field of study
• If legacy status is lost, the new loan limits apply.

All borrowers enrolled less than full-time (12 credit hours) will only be able to borrow loan amounts in direct proportion to their enrollment status.  For undergraduate program of study, a student must take 24 credits annually to be considered full-time (12 credits per semester or 12 credits across 3 terms for online division programs).

The bill contains two eligibility changes:

1. Students receiving scholarships that meet or exceed their full cost of attendance will not be eligible for Pell Grants.
2. Students whose Student Aid Index (SAI) is at least two times the current Pell Grant maximum of $7,395 will not be eligible for the Pell Grant. As of FY25, that equates to an SAI of $14,790.

The bill creates a new Income-Based Repayment (IBR) plan called the Repayment Assistance Plan (RAP).

• If married filing separately, spouse’s AGI and number of dependents are not included in the payment calculation
• $10 minimum payment
• Monthly payment is 1-10% of income based on AGI
• $50 off monthly payment (base payment) per dependent
• 30-year repayment period
• Eliminates negative amortization
• No cap on monthly payment, even if it’s higher than the standard repayment plan would be
• If a borrower makes an on-time payment that reduces their principal by less than $50, ED will make a payment to the principal, up to the amount paid, minus what was applied to the principal or $50, whichever is less.

After all current borrowers move out of all other current Income-Driven Repayment plans or Standard plans, the current plans will be sunset.

The bill creates a new standard plan with a fixed monthly repayment amount paid over 4 fixed terms of 10, 15, 20, or 25 years based on the amount borrowed (or outstanding balance if in repayment).

The bill removes the requirement for borrowers to demonstrate a partial financial hardship. It also retains cancellation for balances of loans repaid under IBR at 25 years, or 20 years for new borrowers, and allows for covered income contingent loans to be repaid under IBR.

Borrowers with new loans made on or after July 1, 2026, can be repaid using only two plans: a new Standard Repayment Plan and the new IBR plan, the RAP. If a borrower with new loans made on or after July 1, 2026, does not select a plan, they will be assigned to the new Standard Repayment Plan.

All loans must be paid under the same repayment plan, so borrowers with loans made before July 1, 2026, who take out additional loans on or after July 1, 2026, will only have the RAP and the new Standard Repayment Plan as options.

Current borrowers with no new loans made on or after July 1, 2026, are eligible to enroll in the current Standard, Graduated, Extended, or current IBR repayment plans, and may also opt in to the new RAP. Current borrowers may also switch between, enter or remain on existing Income-Driven Repayment plans until July 1, 2028.

Current borrowers enrolled in Income-Contingent (ICR), Pay As You Earn (PAYE), or Saving on a Valuable Education (SAVE) plans must transition to a different repayment plan (current IBR, current standard plans, or RAP) by July 1, 2028. If no selection is made by that date, they will be moved into the RAP automatically. 

All new Parent PLUS loans from July 1, 2026, on must be repaid under the standard repayment plan and are not eligible for RAP. If a borrower chooses RAP but has a loan that is not eligible for RAP (like Parent PLUS and certain consolidated loans), they must repay the ineligible loan(s) separately. 

Consolidation loans made on or after July 1, 2026, are only eligible for the RAP or standard repayment plans.  

A consolidation loan (subsidized or unsubsidized) taken out by a borrower before July 1, 2026, is treated like any other eligible loan. Borrowers currently in an Income-Driven Repayment plan have until July 1, 2028, to select a standard plan, IBR, or RAP.

If the consolidation loan was used to pay off a Parent PLUS loan, it must enter repayment under Income-Contingent Repayment plan before July 1, 2028, to become eligible for IBR.

If the borrower takes no action by July 1, 2028, all eligible loans will be automatically moved to RAP, and any loans not eligible for RAP will be placed into IBR.

Borrowers can rehabilitate a defaulted loan twice, instead of once as currently allowed. The minimum rehabilitation payment for Direct Loans changes to $10.

The bill sunsets the economic hardship and unemployment deferments. 

Borrowers with loans made on or before July 1, 2027, are still able to use these deferment options under the current rules. Once all borrower’s loans made prior to that date are paid in full, these options will cease to exist.

Loans made on or after July 1, 2027, are eligible for forbearance for up to nine months in any two-year period.

The current rules allow for a forbearance up to 12 months at a time, with a cumulative limit of three years.