Students opting into repayment plans for federal student loans will have fewer options starting Wednesday when changes enacted by the One Big Beautiful Bill Act go into effect.
The act ends both the Grad PLUS program and the Biden-era SAVE plan, sets new loan limits for graduate and professional students, allows institutions to set loan caps on their programs and creates a new tiered repayment plan, as well as a new income-driven repayment plan.
Borrowers currently enrolled in a repayment loan program will not have to follow the new cap limits and can continue using their plan if they qualify for legacy status.
The U.S. Department of Education also announced in June that federal student loan borrowers enrolled in autopay will be eligible for a 1% interest rate reduction starting Wednesday. Those who apply by Sept. 30 will benefit from the interest rate reduction through June 30, 2028.
Here are major changes that take effect Wednesday, according to the education department.
New loan limits
In order to “help curb tuition growth by ending unlimited borrowing,” the U.S. Department of Education’s final rule ended the Grad PLUS program, which offered graduate students the chance to borrow up to the cost of attendance.
Graduate students will maintain the annual borrowing cap of $20,500, but starting Wednesday, the act sets a new aggregate cap of $100,000. In contrast, graduate students pursuing a professional degree will be allowed to borrow up to $50,000 a year with a $200,000 total.
The 11 program fields listed under the professional degree category include pharmacy, dentistry, veterinary medicine, chiropractic, law, medicine, optometry, osteopathic medicine, podiatry, theology and clinical psychology degrees.
The act also applies limits to first-time Parent PLUS program borrowers.
In the past, parents could apply for loans up to the total cost of college attendance for a child. Under Wednesday’s changes, parents will be limited to $20,000 per year and $65,000 total per dependent student. The new limits will apply to all parents combined per dependent student.
Students applying for a loan on or after the deadline will have a $257,500 lifetime loan limit with few exceptions.
Limited repayment plans
To repay the loans, the act has limited the number of options available to families and students to just two. Starting Wednesday, borrowers will have to repay their loans under either the Tiered Standard Plan or Repayment Assistance Plan.
Borrowers currently using income-contingent repayment plans will be able to do so until the plans sunset on July 1, 2028.
The new Tiered Standard Plan offers fixed monthly payments over a period ranging from 10 to 25 years. The tiers include 10 years for borrowing less than $25,000; 15 years for $25,000 to $49,999; 20 years for $50,000 to $99,999; and 25 years for $100,000 or more. Borrowers must pay a minimum $50 monthly payment.
The Repayment Assistance Plan is a new income-based repayment option, which waives unpaid interest for borrowers who make on-time payments that do not fully cover accruing interest. Following each on-time payment, the Department of Education reduces the principal by an amount equal to the borrower’s payment, up to $50. Monthly payments are $10 minimum.
Borrowers currently enrolled in the Saving on a Valuable Education program will have 90 days to apply for either the Tiered Standard Plan or Repayment Assistance Plan, starting Wednesday.
The SAVE program was started in 2023 by the Biden administration to offer low monthly payments and accelerated loan forgiveness for many of its borrowers. In December 2025, the Department of Education announced a proposed joint settlement agreement with the state of Missouri to end the SAVE program.
Uncertain impact
The University of Missouri is waiting for additional guidance from the federal government to fully implement and administer the changes, according to a statement by university spokesperson Travis Zimpfer, adding that Mizzou is not in a position to speculate about the long-term impact the changes will have on borrowing patterns, enrollment decisions or the institution’s strategies.
“Because the provisions are new and implementation is still evolving, it is too early to determine how students may ultimately respond or whether the changes will have measurable effects on specific academic programs,” the statement read.
Other professionals in financial aid circles share the same uncertainty about the effect of changes on first-time borrowers.
Tony Lubbers, chair of the legislative committee of the Missouri Association of Student Financial Aid Personnel, said he imagines students may consider private loans, employer support, scholarships, reduced course loads or other options to cover the remaining attendance costs not supported under the new borrowing limits.
He said in an email that while most institutions have a private lender list made available to students to help fill the gaps, it’s ultimately up to students and families to decide.
“While we can maintain a lender list, we have strict guidelines about ‘partnering’ or ‘steering’ students to specific private lenders,” Lubbers said in the email. “So we only provide the information to assist the student/parent to make the most informed decision they can when selecting a lender.”
Raising awareness of the changes has been a focal point for the Education Advisory Board, a national consultant company for educational institutions, said Amy Luitjens, managing director with the board’s Adult Learner Recruitment.
She suspects that students entering the new school year unaware of the changes will be surprised, also noting that it’s hard to gauge what the impact of the act will be since it’s unprecedented.
“There is a prevailing sentiment that I agree with, which is, we are not quite sure just how the market will respond,” Luitjens said. “Meaning that we don’t know for certain which students will or will not choose to enroll, which students will or will not choose to try to seek out additional funding sources.
“Because this is something that this new landscape is something that we have not encountered in recent higher education history in the graduate space.”
