If you’ve been reading headlines about student loans and wondering what they mean for you, you’re not alone.
The short answer: Federal student loans are still available, but many rules have changed effective July 1, 2026.
For undergraduate students, the basics remain unchanged. First-year students can borrow up to $5,500 in federal Direct Loans, with loan limits increasing in later years of college.
For graduate students and parents, a lot has changed. There are new federal borrowing limits that will impact how families pay for college and graduate school.
For current college students and borrowers, the repayment system is complicated. Some borrowers remain under the old rules, while others are subject to new repayment plans and borrowing limits. See our updates below and check with your loan servicer to find a repayment plan you can afford.
The new rules and loan limits make it more important than ever to borrow with caution. Avoid taking on more debt than you can reasonably repay. And make a financial plan for graduate school as early as possible.
Despite all the changes, federal student loans remain the safest way to borrow for college. The key is to borrow only what you truly need and what you realistically can afford to repay.
Here’s what you need to know:
Q: What’s the latest with student loans?
A: Federal student loans are still available to eligible students who complete the Free Application for Federal Student Aid (FAFSA) and meet other basic requirements.
For undergraduate students, the annual limits on Federal Direct subsidized and unsubsidized loans have not changed. The amount you can borrow depends on your year in school and whether you are considered a dependent or independent student.
A typical college freshman can borrow up to $5,500 in the first year, followed by $6,500 in the sophomore year and up to $7,500 in both the junior and senior years. College counselors generally advise students to cap their debt at this amount, and to avoid private loans.
Q: What’s new for Parent PLUS loans?
A: Parent PLUS loans are government backed loans that parents can take out to support their children’s college education.
Parents of dependent undergraduate students may now borrow up to $20,000 per year under the Parent PLUS loan program. There is also a $65,000 lifetime limit per student, which for many private schools will not even cover one year of tuition. This is a big change from prior years when eligible parents could borrow up to the full cost of attendance, minus other financial aid.
Parent PLUS loans can be helpful, but they can also be risky. They are taken out by the parent, not the student, and they may be difficult to repay given other competing family expenses.
Before taking out a Parent PLUS loan, families should ask:
- Can we afford the monthly payments?
- Will we need to borrow again next year?
- Will this debt interfere with retirement, housing or other family needs?
- Is there a less expensive college option?
Q: What has changed for graduate school loans?
Graduate and professional school students now face major borrowing limits under a new federal loan program.
The Graduate PLUS loan program—which allowed graduate and professional students to borrow up to the full cost of attendance—is no longer available for new graduate and professional school borrowers, except for some students who qualify under limited transition rules.
Under the new rules, graduate students may generally borrow up to $20,500 per year in Direct Unsubsidized Loans, with a $100,000 lifetime limit for graduate study.
Professional students enrolled in degree programs for medical, dental, law, and several others may be able to borrow up to $50,000 per year, with a $200,000 lifetime limit.
There is also a lifetime federal student loan limit of $257,500 for most borrowers across undergraduate, graduate, and professional study.
This is a big deal for students considering careers that require graduate school. Students who borrow heavily as undergraduates may have fewer options later if they need an advanced degree.
Note: Initially, the list of professional degree programs eligible for the higher loan limit was very small, prompting states to sue the Department of Education. Shortly before July 1, 2026, a federal court temporarily blocked use of the narrow definition of “professional.” In response, the Department of Education expanded its list of professions that are eligible for the larger loans.
For now, the broader definition remains in effect, allowing more students to qualify for the higher borrowing limits.
However, this could change as the litigation continues. Students considering degree programs added in response to the lawsuit—such as registered nurse, physical therapist, and speech pathologist—should not rely on the higher borrowing limits when planning how to pay for graduate school.
Q: What loan repayment plans are available now?
A: New borrowers generally have two main repayment options: a standard repayment plan and the new Repayment Assistance Plan, known as RAP.
Under the standard repayment plan, you pay a fixed monthly amount and your repayment term is determined by how much you borrowed. For instance, if you borrowed less than $7500, you have 10 years to pay back the loan; between $7,500–9,999, you have 12 years, etc. The repayment term schedule gradually increases to a maximum of 30 years for loans more than $60,000.
RAP is income-based, which means payments are tied to your income and family size. Existing borrowers may still have access to some older repayment plans for now (but not SAVE), however those options are being phased out.
Also, the government is offering incentives to current borrowers. For federal loan borrowers currently in repayment, there is some short-term savings available so long as they enroll in auto pay by December 31, 2026. If they do by the deadline, they will be eligible for a one percent loan interest rate reduction that will run through June 28, 2028.
Q: What happened to the SAVE loan repayment plan?
A: The Saving on a Valuable Education or SAVE plan has ended. Borrowers who were enrolled in SAVE need to choose another repayment plan.
Borrowers will be contacted by their loan servicers with explanation of their repayment options as well as a deadline to choose one. Borrowers who do not choose a new plan by their deadline may be placed into a standard repayment plan, which could mean higher monthly payments.
If you were in SAVE, do not ignore messages from your loan servicer or Federal Student Aid. Better yet, be proactive. Log in to StudentAid.gov, check your loan servicer’s website, and look carefully at your repayment options.
Q: Is it still safe to take out federal student loans?
Loans are legally binding agreements. Once you take out a loan, the government can’t cancel or change the terms. The terms you agree to, including the loan amount and interest rate, will be honored.
Federal student loans offer fixed interest rates, more repayment options and stronger borrower protections than private loans. Private loans may also require a creditworthy borrower or co-signer.
That said, “safer” does not mean “free money.” Every loan must be repaid with interest. And while the loan terms can’t change, repayment plan options, forgiveness programs, and borrowing rules for future loans can.
That’s why it’s critical to borrow only what you need, keep track of your total debt and notices from your loan servicer, and avoid making common mistakes.
Q: Are loan forgiveness programs still available?
A: The Public Service Loan Forgiveness (PSLF) is still available for eligible borrowers who work full time for qualifying government agencies or nonprofit organizations and make the required number of qualifying payments.
If you are pursuing PSLF, keep detailed records, certify your employment regularly, and review your account periodically to make sure you remain on track.
Think you may be eligible for PSLF? Check StudentAid.gov or speak and speak with your loan servicer before making decisions.
Q: I am struggling to repay my loans. What should I do?
A: Don’t ignore the problem. Waiting can lead to delinquency, damaged credit, and fewer choices later.
Log in to your account at StudentAid.gov, contact your loan servicer, and explore your repayment options as soon as possible. Note: Borrowers who consolidated their loans prior to July 1, 2026 may still have access to the IDR repayment plan, which is being phased out.
Asking for help early is one of the smartest financial decisions you can make.
Q: Who is managing the student loan program?
A: The federal student loan program currently is managed by the U.S. Department of Education through its Office of Federal Student Aid, but oversight will shift to the Department of Treasury in three phases, though the timeline for rolling out each phase has yet to be finalized.
- Phase 1:Treasury will take control of collecting on defaulted student loans.
- Phase 2: Treasury will take over servicing most federal student loans–both in-default and those in good-standing.
- Phase 3: Treasury will expand its responsibilities to include administration of the FAFSA.
In the near term, not much will change from the borrower’s standpoint. You’ll continue to take out and manage your loans through StudentAid.gov and your loan servicer.
Bottom line
Federal student loans are still available, and for many students they remain an important tool for paying for college.
But the rules have changed.
Families need to be careful, informed, and very realistic about borrowing for college. Think about how much debt you are taking on, compare colleges carefully, and have a plan not just for paying for school, but also for paying back what you borrow.
Laura Zingmond is the senior editor of InsideSchools.org and UnderstandingFAFSA.org. She is passionate about improving equity in education at all levels and is a seasoned veteran of the college financial aid system. Ask her anything about the FAFSA, the CSS Profile, and communicating with financial aid offices.