Student Loan Borrowers: Important Student Loan Changes Effective July 1

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The latest updates from our student loan expert, Celina Damian. Recent changes to the student loan system set limits on the amount parents and students can borrow for college.

Updated: July 27, 2026

Do you need expert guidance on your student loan? Submit your questions to our Student Loan Servicing Ombudsperson, Celina Damian. She addresses your inquiries and answers some of them here. For more information, visit our Student Loans page or email your questions to Celina at StudentLoanServicing@dfpi.ca.gov

Beginning July 1, 2026, the One Big Beautiful Bill introduces major changes to how much students and families can borrow in federal student loans.

New Lending Limits

The law sets annual and lifetime caps across all borrower groups:

Parent PLUS Loans: Up to $20,000 per year per dependent student, with a $65,000 lifetime limit.
Graduate Students: The Grad PLUS Program will be eliminated. Graduate borrowers can take out up to $20,500 per year with a $100,000 lifetime limit.
Professional Students: Up to $50,000 per year with a $200,000 lifetime limit.
All Borrowers: A new lifetime combined maximum of $257,500 for all federal student loans, regardless of prior repayments or discharges.

Students who remain enrolled in the same program of study and institution before July 1, 2026, may qualify for an exception to the new limits. Learn more about student loan limits from the Federal Student Aid (FSA) page.

Changes to Repayment Options

Another significant change is the simplification of repayment options for new borrowers, or borrowers with loans disbursed after July 1, 2026.

New Plans for New Borrowers

Tiered Standard Plan: The only fixed-term plan available to new borrowers.
Repayment Assistance Plan (RAP): Available for all new borrowers except Parent PLUS borrowers.

Battling Bureaucracy for Borrowers

Kay* consolidated her student loans, believing she had already made eligible payments to qualify for the Public Service Loan Forgiveness (PSLF) program. Unfortunately, her record with Federal Student Aid (FSA) was missing a large portion of her payments—making her ineligible for PSLF. Find out how Kay, with assistance from DFPI’s Student Loan Servicing Ombudsperson, secured loan forgiveness. Read more.

*A pseudonym is used for privacy.

What Happens for Existing Borrowers

Borrowers with loans issued before July 1, 2026, can keep their current term and IDR plans, provided they do not take out new loans or consolidate on or after that date. However, ICR, and PAYE will be phased out by July 1, 2028, leaving only the IBR and RAP plans as the remaining IDR options. For more information about repayment plans, visit the FSA page.

Beware of Student Loan Scams and Fraud

Make sure to keep your contact information up to date with both your student loan servicer and StudentAid.gov. Beware of student loan scams and fraud and use DFPI’s free student loan borrower resources: