2026 Student Loan Changes: New Repayment Plans, Borrowing Limits, and Tax Implications

Key changes to U.S. student loans take effect in 2026, impacting borrowers through new repayment plans, borrowing limits, and tax rules. The "One Big, Beautiful Bill" introduces the Repayment Assistance Plan (RAP), an income-driven plan set to launch on July 1, 2026, replacing existing options for new borrowers. While RAP may reduce payments for some, lower-income borrowers could face higher costs due to a $10 monthly minimum. Additionally, new loan limits restrict Parent PLUS and Grad PLUS loans, potentially increasing reliance on private loans. Borrowers who reached forgiveness between 2021-2025 remain tax-exempt, but future forgiveness will be taxable. A Trump-era rule also threatens Public Service Loan Forgiveness (PSLF) eligibility for certain nonprofit workers, sparking legal challenges. These shifts mark a significant overhaul of the student loan landscape for upcoming borrowers.