Core Insights - High school seniors entering college in fall 2026 will encounter a transformed federal student loan landscape due to the 'One Big Beautiful Bill' which implements significant changes effective July 1, 2026 [1][2] Loan Limits - Stricter loan limits will be imposed on Parent PLUS loans, allowing families to borrow only up to $20,000 per year with an aggregate limit of $65,000 per child, contrasting with the current system that has no aggregate limit [4][5] - Nearly 30% of Parent PLUS loan borrowers will be impacted by these new limits, primarily affecting middle-to-higher income families not eligible for Pell Grants [5][6] Repayment System Changes - A new repayment system will be introduced for college students taking loans after July 1, 2026, which will differ significantly from current options [7][9] - Borrowers will be placed in a standard repayment plan based on their loan size, with repayment periods ranging from 10 to 25 years [11][12] - The new Repayment Assistance Plan (RAP) will replace two existing income-driven repayment plans by 2028, potentially increasing monthly payments for lower-income borrowers compared to current plans [13][14]

Core Insights - Major changes to the federal student loan system will take effect on July 1, 2026, primarily due to the Trump administration's One Big Beautiful Bill Act (OBBBA) [1] Group 1: Repayment Plans - New repayment options will be limited to two plans for loans disbursed after July 1, 2026, while existing borrowers can continue with three current plans until they transition [2] - Current income-driven repayment plans (PAYE, ICR, IBR) will phase out, with PAYE and ICR ending by July 1, 2028, leaving IBR and the new Repayment Assistance Plan (RAP) as options for future borrowers [4][3] - The RAP will set payments based on income, with potential forgiveness after 30 years [7] Group 2: Borrowing Limits - Federal borrowing limits will tighten starting July 1, 2026, with part-time students facing reduced limits based on enrollment status [11] - Current borrowers can access previous borrowing limits for three years or until program completion, with graduate students able to borrow up to $20,500 annually [12][16] Group 3: Grad PLUS Loans and Parent Loans - The Grad PLUS loan program will be eliminated after July 1, 2026, affecting graduate and professional students seeking financing [13] - Parent PLUS loans issued after July 1, 2026, will not qualify for Public Service Loan Forgiveness (PSLF), limiting options for future borrowers [17][18] Group 4: Deferment and Tax Implications - New loans will not be eligible for economic hardship or unemployment deferments starting July 1, 2027, and forbearance will be limited to nine months within a two-year period [20] - Student loan forgiveness may become taxable again after 2025, impacting borrowers who receive forgiveness in 2026 or later [21] Group 5: Preparation Steps - Borrowers are advised to review their current repayment plans, compare future options, and note key deadlines to prepare for the upcoming changes [22][23] - Parent borrowers should act quickly to access income-driven plans or PSLF eligibility, and consider potential tax implications of loan discharge [25]