A major federal student loan overhaul is set to take effect July 1, 2026 bringing big changes to repayment plans, loan limits, and eligibility for forgiveness programs. Experts are urging borrowers to review their options now on studentaid.gov, because some plans will disappear or become unavailable to new borrowers.
Already have a student loan? The biggest repayment changes are:
- The SAVE (Saving on a Valuable Education) program is ending. Borrowers still in SAVE will be contacted by loan servicers around July 1 and given 90 days to move to a new plan. However, payments made during that transition period may not count toward Public Service Loan Forgiveness or income-driven forgiveness, so borrowers pursuing forgiveness may want to switch sooner.
- The PAYE (Pay As You Earn) and ICR (Income-Contingent Repayment) programs are being phased out. Borrowers with loans disbursed before July 1 may still use or keep these plans for now, but both are scheduled to fully end by July 1, 2028.
- The IBR (Income-Based Repayment) program will close to new enrollees. Existing IBR borrowers with loans disbursed before July 1 can remain on the plan, but new enrollment will stop.
- Parent PLUS borrowers face a major deadline. Parents must consolidate Parent PLUS loans into a Direct Consolidation Loan before July 1 to keep access to income-driven repayment and PSLF. Those who do not consolidate will permanently lose access to those options and may be stuck with standard repayment.
Starting July 1, new borrowers will generally have only two repayment options:
- Standard Repayment Plan, which has fixed payments over 10 to 30 years,
- Repayment Assistance Plan, a new program, which is an income-driven plan with payments from 1% to 10% of adjusted gross income, or $10 per month for very low-income borrowers. Remaining balances can be forgiven after 30 years.
Also to note for new and existing borrowers:
- Grad PLUS loans will end. Current borrowers may be grandfathered in for up to three more academic years if they already had at least one disbursement before July 1.
- Graduate unsubsidized loans will be capped. Standard graduate programs will be capped at $20,500 per year and $100,000 total, while qualifying professional programs such as medical, dental, and law programs will be capped at $50,000 per year and $200,000 total.
- Parent PLUS loans will be capped. New limits will be $20,000 per year per student and $65,000 lifetime per dependent, unless the borrower is grandfathered under the old rules.
So now what?
Borrowers, especially those in SAVE, Parent PLUS borrowers, graduate students, and anyone pursuing forgiveness, should review their options before July 1 so they do not lose access to better repayment or forgiveness pathways.
How can we help?
We partner with Sallie Mae Bank for student loans. As a First Northern member, you'll have access to competitive variable and fixed interest rates, no origination fee or prepayment penalties1, and multiple repayment options. We'd love to talk with you soon — before the changes go into effect — to help you maximize your options and save money.
Learn more and contact our partner today — before it's too late!