For years, the student loan system has felt like a roller coaster. Payments paused, interest frozen, forgiveness programs debated in court—borrowers didn’t know whether to hold their breath or hope for relief. Now, with the passage of the One Big Beautiful Bill Act (OBBBA), the ride is slowing down. The system is entering a more stable phase, but there’s a catch: stability now comes with stricter rules and fewer options.

That’s good news if you’ve been craving predictability. It’s not such good news if you’re a parent, graduate student, or professional trying to map out your education funding or repayment strategy. For many families, the landscape just got harder.

Borrowing Limits: A Hard Stop for Parents and Graduate Students

For decades, Federal student loans operated with few real ceilings. If tuition was high, parents could borrow to cover it through Parent PLUS loans, and graduate students had Grad PLUS loans that covered nearly all costs of attendance. That era is over.

Under OBBBA, undergraduate borrowing limits remain unchanged at $27,000 over four years (or $31,000 if graduation takes longer). But for parents, borrowing is capped at $20,000 a year with a lifetime maximum of $65,000 per child. Graduate PLUS loans are eliminated altogether, leaving graduate students with just unsubsidized loans: $20,500 per year for most programs and $50,000 per year for professional degrees like medicine or law. A lifetime cap of $257,600 now applies across Federal programs (excluding Parent PLUS).

For families, these numbers don’t stretch very far. Private colleges can run $60,000–$80,000 a year, and professional schools often cost six figures. Without unlimited PLUS loans, parents and students will need to weigh savings, private lending, or even different school choices. And while private loans may bridge the gap, they rarely come with the safety nets—like forgiveness or income-driven repayment—that Federal loans once offered.

Example: A couple we’ll call John and Maria had planned on covering most of their daughter’s tuition at a private university with Parent PLUS loans. Under the old rules, they could have borrowed the full cost. Now, with the $65,000 lifetime cap, they’ll need to either look at private loans or rethink whether a more affordable in-state option makes more sense.

Repayment Rules: Goodbye Simplicity, Hello Complexity

Previously, borrowers who did nothing after graduation were placed into the standard 10-year repayment plan. Straightforward enough: pay the same amount every month for a decade, and you’re done.

OBBBA rewrites that. Beginning July 1, 2026, the standard plan becomes balance-based, stretching from 10 to 25 years depending on what you owe. That might make monthly payments smaller, but there’s a trap—only the 10-year version counts toward Public Service Loan Forgiveness (PSLF). Unless borrowers proactively switch to an eligible plan, they could unknowingly disqualify themselves from forgiveness. Extended and graduated repayment plans will also disappear, removing what little flexibility remained for certain situations.

RAP: The New Default Income-Driven Repayment

Income-driven repayment has always been messy, with half a dozen overlapping programs. OBBBA clears the table and replaces them with one primary option: the Repayment Assistance Plan (RAP), set to become standard by 2028.

RAP ties payments to Adjusted Gross Income using a progressive formula and even reduces required payments by $50 for each dependent. Perhaps the most important shift is how it handles interest: any unpaid interest is covered by the government, so balances can no longer balloon through negative amortization. Borrowers still get forgiveness, but only after 30 years—and under current tax law, that forgiveness will be taxable.

For borrowers with modest incomes, RAP can provide breathing room, but high earners may do better under IBR thanks to capped payments. The right choice will depend heavily on income trajectory and long-term goals.

Example: Chris, a mid-career public defender with $180,000 in graduate loans, faces a big decision. Under Old IBR, his payments are higher now, but capped in the future. RAP would lower his payments today but stretch his repayment to 30 years. For Chris, who plans to stay in public service and pursue PSLF, sticking with IBR until forgiveness may be the smarter path.

Parent PLUS Loans: A Closing Window

No group feels the squeeze of OBBBA more than parents. Parent PLUS borrowers already had fewer repayment options, and now their choices are shrinking to nearly none.

Families who consolidate Parent PLUS loans before July 1, 2026 can still access Income-Contingent Repayment, which will eventually roll into IBR. That keeps the possibility of lower payments and even PSLF alive. After that deadline, Parent PLUS loans will only be eligible for standard repayment—with no income-driven options and no forgiveness.

For parents who expected to stretch payments into retirement, the clock is ticking. This is a decision that can’t be left until the last minute.

Public Service Loan Forgiveness: Stable, With a Side of Politics

For now, PSLF remains intact. Borrowers still need 120 qualifying payments while working for a public or nonprofit employer. RAP counts as eligible, as does IBR. But politics continue to swirl, and proposals to restrict eligibility surface regularly.

That uncertainty makes documentation essential. Annual employer certification, accurate payment records, and personal copies of servicer statements are no longer just good habits—they’re survival tools.

Key Deadlines You Can’t Ignore

A few dates rise above the noise:

• July 1, 2026: RAP opens for new borrowers; Parent PLUS consolidation cutoff; phaseout of older IDR plans begins.
• July 1, 2028: All legacy IDR plans are gone.
• December 31, 2025: Tax exemption on forgiven balances expires. Starting in 2026, forgiveness is taxable income again unless Congress extends the break.

These aren’t abstract policy changes—they’re decision points that can shape a family’s financial trajectory for decades.

Planning Implications for Clients

Families with teenagers will need to rethink college funding strategies now that Federal borrowing limits are stricter. Graduate students must weigh whether certain programs make financial sense without PLUS loans to fall back on. Professionals chasing PSLF need to be deliberate about choosing IBR or RAP rather than assuming their payments will count. And for parents with PLUS loans, the 2026 consolidation deadline may be the last chance to keep repayment manageable.

Closing Thoughts: Stability With Strings Attached

After half a decade of chaos, the student loan system is finally predictable again. But stability doesn’t mean easier. With tighter borrowing caps, longer repayment timelines, and fewer paths to forgiveness, planning ahead has never been more important.

At Suttle Crossland, we believe clarity is the antidote to confusion. Whether you’re preparing to send a child to college, considering graduate school, or sorting out repayment in mid-career, the new rules demand fresh strategies. Acting before deadlines close is the surest way to keep your options open—and to keep your financial future on track.