If you’re counting on student loan forgiveness or manageable payments, this new law may flip your entire plan upside down. The “Big Beautiful Bill,” signed into law on July 4, is being hailed by its supporters as a bold economic reset. But for student loan borrowers, it’s a sweeping overhaul that takes away affordable repayment options, tightens access to federal loans, and replaces flexibility with strict new limits.
Whether you’re repaying loans, planning to borrow for grad school, or helping your kids fund college, these changes will likely affect your monthly bill—and possibly your future.
What’s Changing for Borrowers?
Under the new law, nearly every piece of the student loan system is being rewritten, especially for low- and middle-income Americans who relied on income-driven repayment plans.
1. Income-Based Repayment Plans Are Ending
Starting in July 2026, the current income-driven repayment (IDR) plans like SAVE, PAYE, and ICR will be eliminated. In their place, borrowers will have to choose between:
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A new Repayment Assistance Plan (RAP) with payments ranging from 1–10% of your income and a minimum monthly payment of $10
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Or a fixed monthly repayment based on your total loan balance, with terms of 10 to 25 years
Unlike today’s plans, unpaid interest under RAP doesn’t disappear—it capitalizes, meaning it gets added to your balance and increases your long-term costs. And forgiveness? It now comes only after 30 years of payments, not 10 or 20 like before.
Deferment and Forbearance Are Cut Back
Unemployment and hardship deferments—lifelines for millions during tough times—are being eliminated. Instead, borrowers get a limited forbearance window of just nine months every two years. If you lose your job or face medical hardship, you may still be expected to pay.
PLUS Loans Are Getting Slashed
The bill also targets graduate and parent PLUS loans:
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Graduate PLUS loans will no longer be available to new borrowers after July 2026, and fully phased out by 2030.
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Parent PLUS loans are capped at $65,000 per student and will no longer qualify for income-based repayment.
For many families, this forces them to turn to private lenders, which often carry higher interest rates and fewer protections.
New Borrowing Limits for Grad Students
Grad and professional students will now face lifetime borrowing caps:
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Up to $100,000 for most graduate programs
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Up to $200,000 for professional degrees like law and medicine
Annual limits will also be imposed—meaning many students may need to seek alternative funding or work more during school.
Schools Will Be Held Accountable, Too
Colleges whose graduates earn less than the median salary of high school graduates in their state will lose access to federal loan programs. This change is aimed at weeding out underperforming or for-profit institutions—but it could also impact smaller or rural schools.
What Borrowers Should Do Right Now
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If you’re in an IDR plan, consolidate your loans and enroll before July 2026 to lock in your benefits before they’re gone.
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Calculate your new monthly payments under RAP or fixed plans using a loan simulator.
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Avoid PLUS loans if you can—they’ll offer far less flexibility starting soon.
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Plan ahead if you’re applying to grad school—new caps mean you may need backup funding sources.
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Push for policy updates—some lawmakers are already talking about revising the harsher parts of the bill in follow-up legislation.
What’s at Stake?
For millions, this isn’t just a policy change—it’s a major financial hit. Monthly payments could rise, loan forgiveness will take longer, and the safety nets many borrowers depend on will be harder to access. These new rules could cost borrowers thousands more over the life of their loans and limit access to higher education for those without family wealth.
