If you’re helping a student pay for college—or getting ready to soon—you need to know about some important updates coming to federal student loans.

The One Big Beautiful Bill (OBBB) Act, signed into law in July 2025, will start changing how families borrow and repay federal student loans beginning July 1, 2026. These changes could affect how much you’re able to borrow as a parent and what repayment options are available down the road.

Here’s a breakdown of what’s changing—and how to start preparing.

New Limits for Parent PLUS Loans

Federal Parent PLUS loans are a popular choice for parents who opt to take out a loan in their own name to help cover the costs of their child’s education. Today, Parent PLUS borrowing can cover up to a school’s full cost of attendance (minus other aid such as scholarships and grants). Starting July 1, 2026, new Parent PLUS loans will be limited to:

• $20,000 per year and
• $65,000 total per student

With the average cost of college in the U.S. exceeding $38,000 per year, federal loans won’t stretch as far as they used to. That could leave funding gaps that families need to fill with private student loans.

What to do:

• Map out all four years of expected college costs so you can see where potential gaps might appear.
• Start exploring other financing options early, especially if your student will still be in school after 2026.

Tip: An education line of credit from one of our credit union lenders allows you to apply now even if you aren’t certain of the amount you’ll need, or even the college your child will be attending.

Simplified (But Fewer) Repayment Plans

The OBBB Act also changes how borrowers repay federal student loans. The goal is to make the system easier to understand—but it will come with fewer choices.

Borrowers with new loans made on or after July 1, 2026, can be repaid using only two plans: a new standard repayment plan and the new income-based repayment plan, RAP.

• The new Standard Repayment Plan will feature fixed monthly payments for 10–25 years, depending on how much you owe.
• A new Repayment Assistance Plan (RAP) will base payments on your income, typically ranging from 1% to 10% of earnings. RAP leads to student loan forgiveness after 30 years, rather than the 20 or 25 years of other plans.

Parents Already Carrying Parent PLUS Loans

Parents already carrying Parent PLUS loans are not required to change anything right now.

• Existing loans will continue under current terms, but if you’re enrolled in ICR, PAYE, or SAVE plans, you must transition to a different repayment plan (current IBR, standard plan, or RAP) by July 1, 2028.
• Current borrowers may switch between, enter or remain on existing IDR plans until July 1, 2028. If no selection is made by that date, you will be moved into the new RAP automatically.

Considering refinancing Parent PLUS loans under your student’s name? Learn more about the pros and cons, including the loss of some federal student loan protections.

Key dates to remember

July 1, 2026: Major borrowing-limit changes begin (including Parent PLUS caps).

July 1, 2028: Repayment simplification to two primary plans targeted to begin.

Bottom Line

College costs aren’t getting any smaller, and these changes could shift how much families can borrow through federal programs. The best move? Start planning now.

Understanding how the OBBB Act affects Parent PLUS loans can help you make smart financial choices and avoid last-minute surprises. Review your options and create a plan that fits your family’s needs for the years ahead.