Changes to Federal Loan Programs - One Big Beautiful Bill

Grad PLUS Loans

• Phased out for new borrowers as of July 1, 2026: New Grad PLUS loans will not be available for new borrowers after this date.
• Grad PLUS Loans for Existing Borrowers: Students who borrow any Direct loan or Grad PLUS loan and have it disbursed before July 1, 2026, remain eligible for Grad PLUS loans for up to three years or until their published program length, whichever comes sooner. There can be no lapses in enrollment during this period during any semester.

Graduate Unsubsidized Direct Loans

• Limits for new borrowers as of July 1, 2026: Up to $20,500 per two-semester loan period; $100,000 lifetime borrowing limit.
• Limits for Existing Borrowers: Up to $20,500 per two-semester loan period; $138,500 lifetime borrowing limit.

Undergraduate and Parent PLUS Loans

• Undergraduate Direct Loans: No changes, but borrowed amounts will now count toward new lifetime limits.
• Parent PLUS Loans for New Borrowers: Starting July 1, 2026, loans are capped at $20,000 per student per year, with a $65,000 lifetime limit per dependent student.
• Parent PLUS Loans for Existing Borrowers: Students who borrow any Direct loan or whose parent has borrowed a Parent PLUS loan that has disbursed before July 1, 2026, can access these loans under current limits until completing their current degree, or for up to three additional years (whichever comes first). The current limits are up to the Cost of Attendance minus any financial aid.
• New lifetime maximum of $257,500 for all federal student loans combined, excluding Parent PLUS Loans.

There will be only 2 repayment options available beginning July 1, 2026 – Standard and RAP (Repayment Assistance Program).  

Standard - For loans disbursed after July 1, 2026, the repayment term is determined by the original loan balance. Formerly ineligible for PSLF with a standard repayment plan.  Clarity is needed on PSLF eligibility with new guidelines.

• Up to $24,999: 10-year repayment term (120 payments)
• $25,000–$49,999: 15-year repayment term (180 payments)
• $50,000–$99,999: 20-year repayment term (240 payments)
• $100,000 or more: 25-year repayment term (300 payments)

Repayment Assistance Program - RAP will replace current income-driven repayment plans (IBR, PAYE, SAVE). Eligible for PSLF.    

• Up to 30 years to pay
• 1-10% of Income  
• PSLF (Public Service Loan Forgiveness) Eligible

Borrowers with loans before and after July 1, 2026, will be limited to RAP or standard plans for new loans.

RAP borrowers are not locked into a 30-year plan and can switch to a standard plan (10–25 years).

Borrowers with no new loans after July 1, 2026, can keep existing repayment options and may opt in to RAP.

All borrowers enrolled in ICR, PAYE, or SAVE must transition to a new plan by July 1, 2028—or be moved to RAP if no selection is made.

Please check back for updates as more official information becomes available from the Department of Education. Disclaimer: The information contained on this page is provided by the MGH IHP financial aid office as information to help students understand the changes to loans as a result of OBBB. Students should refer to studentaid.gov for official guidance.