Trump Student Loan Changes Take Effect July 1: New Repayment Plans, Borrowing Caps
Sweeping changes to federal student loan programs went into effect on July 1, 2026, introducing new repayment plans, stricter borrowing limits for graduate students, and higher interest rates for borrowers, affecting millions of Americans.
Major Loan Program Overhaul Begins
For many of the 43 million Americans with federal student loans, July 1 is a day to mark on the calendar. Trump's One Big Beautiful Bill Act is introducing stricter borrowing caps and new repayment plans.
Interest Rate Increases
The interest rate inches up to 6.52% for undergraduate loans and to 8.07% for graduate loans on Wednesday. The reduced rate, which serves as an incentive to get more borrowers to enroll in auto pay, lasts through June 30, 2028.
New Repayment Plan Structure
The law, which Trump signed last July, created a new tiered standard repayment plan and a new Repayment Assistance Plan, known as RAP. Under the standard plan, borrowers will have between 10 years and 25 years to repay their loans depending on the amount borrowed. Those with higher balances will have more time to repay their loans, which will result in smaller monthly payments.
Income-Driven Repayment Changes
Those in the Saving on Valuable Education (SAVE) plan — a Biden administration-era income-driven repayment plan that was blocked by federal courts — are now being notified that they must switch into an alternate plan within 90 days. They will pay considerably more under RAP, experts say.
Graduate Student Borrowing Restrictions
Graduate school students will no longer be able to borrow up to the "cost of attendance" for their programs. A popular loan parents use to help their undergraduate students, the Parent PLUS loan, will be limited to $20,000 annually and to $65,000 total over the course of a student's studies. The new limits apply to parents of new college students enrolling after July 1.