New Student Loan Rules Take Effect July 1 Under One Big Beautiful Bill
Major changes to the federal student loan system took effect July 1, 2026, following the passage of the One Big Beautiful Bill Act. The graduate PLUS loan program ended for new borrowers, several income-driven repayment plans are being replaced, and the autopay interest rate reduction jumped from 0.25 percent to 1 percent. Borrowers have until September 30 to enroll in autopay to lock in the higher discount.
A sweeping overhaul of the federal student loan system took effect July 1, 2026, under the One Big Beautiful Bill Act signed into law in 2025. The changes affect 43 million Americans with federal student debt.
The graduate PLUS loan program ended for new borrowers as of July 1. New annual and lifetime borrowing limits were also imposed on graduate and parent PLUS loans, which could leave some graduate students facing funding gaps.
Multiple income-driven repayment plans are being replaced by a single new option called the Repayment Assistance Plan. The transition has been rocky. Borrowers and servicers have reported technical glitches, repayment options not displaying correctly, and inaccurate payment estimates on loan servicer websites.
One change that benefits borrowers: the interest rate reduction for enrolling in autopay jumped from 0.25 percent to 1 percent for federal direct loans disbursed since July 1, 2012. Borrowers have until September 30, 2026, to enroll and lock in the higher discount, which remains in effect through June 30, 2028.
Existing autopay users do not need to take any action. New enrollees must sign up through their loan servicer's website.
Financial advisors say borrowers currently on the SAVE plan, which is being phased out, have approximately 90 days to choose a new repayment option. Failing to act could result in being placed in a default repayment plan that may carry higher monthly payments.
The Department of Education has acknowledged the technical issues and said it is working to resolve them. Borrowers experiencing problems are encouraged to contact their loan servicer directly and document all communications.
