Paying for college looks different than it did a year ago. Under the One Big Beautiful Bill Act, signed into law in July 2025, new federal loan limits took effect July 1, 2026. Graduate PLUS loans are no longer available to new borrowers, Parent PLUS borrowing is capped, and repayment plans are being reshaped.
To help families understand what has changed, Chris Kampitsis and Ben Soccodato of The SKG Team at Barnum Financial Group have written a summary for parents and students. Key points include:
- New federal loan limits. Graduate students are now limited to $20,500 per year, with a lifetime cap of $100,000. Medical and law students face a $50,000 annual limit and a $200,000 lifetime cap. Independent students face a combined lifetime cap of $257,000 in Direct Loans.
- Parent PLUS caps. Families using Parent PLUS Loans now face a $20,000 annual cap and a $65,000 lifetime limit per student, so many can no longer rely on them to cover full tuition balances.
- Graduate PLUS eliminated. The program ended for new borrowers on July 1, 2026. Those with a loan disbursed before that date may continue borrowing under previous terms for up to three academic years or until they complete their program, whichever comes first.
- Expanded Pell access. The maximum Pell Grant for 2026-27 is $7,395. A new Workforce Pell Grant opens eligibility to accredited short-term training programs of 8 to 15 weeks, creating new pathways for students pursuing trade certifications and career-focused education.
- Rising defaults. As of March 2026, approximately nine million borrowers with $220 billion in federal student loans were in default, more than 13 percent of the $1.64 trillion portfolio. The Department of Education has announced it will transfer responsibility for collecting defaulted loans to the U.S. Department of the Treasury.
- New repayment plans. For loans disbursed after July 1, 2026, IBR, PAYE, and SAVE are eliminated and replaced with two options: the Repayment Assistance Plan (RAP), an income-driven plan with payments of 1 to 10 percent of income over 30 years, and a Tiered Standard Plan with fixed payments over 10 to 25 years. Borrowers currently in SAVE, PAYE, or ICR must transition by July 1, 2028, or they will be moved into RAP automatically.
Taken together, the changes reduce how much families can rely on federal borrowing. As a result, 529 plans, scholarships, and understanding the full cost of education before enrollment deserve more attention than ever.
About The SKG Team at Barnum Financial Group
The SKG Team at Barnum Financial Group, led by Ben Soccodato and Chris Kampitsis, is a group of knowledgeable and experienced CFPs (Certified Financial Planners) and CExPs (Certified Exit Planners). They give each client their personal attention, tailored solutions, and insightful guidance for both short-term financial objectives and long-term financial goals. The SKG Team at Barnum Financial Group works with individuals and families, business owners, and they offer financial literacy programs to Fortune 500 companies. For more information visit: https://www.skgbarnum.com/