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A New Era for Federal Student Loans

Federal student loans have entered a new era. As of July 1, 2026, the One Big Beautiful Bill Act (OBBBA) has reduced repayment options, phased out several existing plans, and introduced new borrowing limits.

If you've felt overwhelmed by repayment plans like SAVE, PAYE, ICR, and IBR, you're not alone. The new system is designed to make repayment easier to understand, but it's still important to know your options and how the new changes could affect you.


Repayment Plans Have Changed

The Saving on a Valuable Education (SAVE) plan is being phased out, and borrowers previously enrolled in SAVE are being transitioned to other repayment options, including the new Repayment Assistance Plan (RAP).

Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) are no longer available to new borrowers. Those already enrolled can remain in their plans through 2028 before transitioning to RAP if they don't choose another option. Income-Based Repayment (IBR) remains available and continues to serve as the primary legacy income-driven repayment plan.


Meet the New Two-Plan System

New federal student loans now offer two primary repayment options:

  • Tiered Standard Plan: The “Standard” plan is no longer a simple 10-year term for everyone. Instead, there is a tiered timeline based on the total amount borrowed, ranging from 10 years for balances under $25,000 to 25 years for balances of $100,000 or more. This ensures that borrowers with larger balances have a more manageable payment.
  • Repayment Assistance Plan (RAP): The RAP plan is the new income-driven option, but for many low-to-middle-income borrowers, it could potentially be more expensive than the retired SAVE plan. This plan bases payments on a sliding scale of 1-10% of adjusted gross income, with a minimum payment of $10 per month for borrowers earning less than $10,000 a year. Borrowers receive a $50 monthly credit for each dependent, and if monthly payments don't cover all accrued interest, the government pays the remaining interest to prevent balances from growing. Any remaining balance may be forgiven after 30 years of qualifying payments.


New Borrowing Limits

Federal borrowing limits have also changed, putting thresholds on how much students and parents can borrow. These changes are intended to curb tuition inflation, but the immediate result for students is a gap in funding. The OBBBA introduces several strict borrowing caps:

  • Grad PLUS Elimination: Grad PLUS loans are no longer available for new borrowers. Previously, you could borrow up to the full cost of attendance, but now you are limited to $20,500 a year for most master’s programs.
  • New Graduate Caps: Graduate students are now subject to annual and lifetime borrowing limits based on their program.
    • Standard Graduate Programs – Capped at $20,500 per year ($100,000 lifetime)
    • Professional Programs (Law/Med) – Capped at $50,000 per year ($200,000 lifetime)
  • Parent PLUS Caps: Parent PLUS loans are limited to $20,000 per year per student, with a $65,000 lifetime maximum. 

For some families, these limits may increase the need for scholarships, savings, employer education benefits, or private student loans to help bridge funding gaps.


What To Do Next

The best way to navigate these changes is to stay informed.

  • Log in to your StudentAid.gov account to review your loan status and current repayment plan.
  • If you were previously enrolled in SAVE, review your available repayment options and determine the best fit for your situation.
  • Use the Federal Loan Simulator to compare payment estimates before making a decision.

The new repayment system reduces the number of repayment options available to borrowers, although the impact on monthly payments and total repayment costs will vary by individual circumstances. Understanding your options today can help you make confident decisions and stay focused on achieving your financial goals.


How ECU Can Help

Planning ahead can make a big difference when it comes to paying for college. Building an education savings plan, whether through a 529 plan or other savings options, can help reduce future borrowing and prepare you for education expenses.

Even with careful planning, there may still be a gap between scholarships, federal financial aid, savings, and the total cost of attendance. An ECU Student Line of Credit can help bridge that gap, allowing you to set up your loan one time and make advances each semester as needed to cover eligible education expenses.

With competitive interest rates, a simple funding process, and flexible repayment options, ECU's Student Line of Credit is designed to help you stay focused on your education with confidence.

Click here to learn more and apply today!