Federal student-loan overhaul takes effect July 1, reshaping repayment and borrowing caps

A sweeping overhaul of the federal student loan program signed by President Trump takes effect July 1, 2026. It introduces a new tiered standard repayment and a Repayment Assistance Plan (RAP) for new loans, caps graduate and Parent PLUS borrowing, and phases out existing repayment plans by 2028. Current borrowers won’t see immediate changes, but they’ll be transitioned to new options later. Auto‑pay discounts rise to 1% through September 2028, and critics warn the new rules could raise costs or reduce borrowing access for some students, even as supporters say the reforms simplify the system and improve loan health.