The options for paying for college just changed significantly. Here’s what you need to know, whether you are a parent, graduate student or an undergraduate.

Effective July 1, modifications to federal student loan rules, enacted under the 2025 "One Big Beautiful Bill Act," have significantly altered borrowing limits and repayment options. Parents taking out Parent PLUS loans are now capped at $20,000 annually and $65,000 total per student, a stark change from the previous full cost of attendance allowance. Graduate students will continue to be able to borrow up to $20,500 per year, but face a new overall cap of $100,000 for their degree. Specific professional degree programs, such as pharmacy, law, and medicine, now have annual borrowing limits of $50,000 and a total cap of $200,000. Additionally, a new lifetime loan cap of $257,500 per borrower has been introduced, encompassing both undergraduate and graduate studies.

New federal student loan borrowers will have only two repayment options: the Tiered Standard Plan and the new Repayment Assistance Plan (RAP). The widely used SAVE plan, along with PAYE and ICR, is being phased out. Borrowers currently on SAVE will receive notifications around July 1, instructing them to select a new repayment option within 90 days, or else be automatically enrolled in the standard plan. Current borrowers who do not take out new loans after July 1, 2026, can continue with their existing repayment plans, including Standard, Extended, Graduated, and IBR, but would also be eligible for RAP.

Pell Grant eligibility has also undergone changes. Starting July 1, 2026, Pell Grants will be available for high-quality, short-term educational programs, including fields like nursing assistance and automotive mechanics. However, eligibility has been tightened, with students who receive non-federal grants or scholarships exceeding their cost of attendance no longer qualifying for additional Pell Grant funding. The "Pellionaire loophole," which allowed high-asset students with low incomes to receive Pell Grants, has been closed. Additionally, borrowers enrolled in auto-pay can receive a 1% interest rate reduction starting July 1, 2026, a discount that will last until June 30, 2028, for those who enroll by September 30, 2026.