5 Student Loan Changes Coming in 2026 That Could Reshape Your Debt

Student debt's getting a facelift—and not the kind that requires another loan to pay for it. Five major shifts hit in 2026, each promising to rewrite the rules for millions of borrowers. Forget incremental tweaks; this is systemic overhaul territory.

1. The Interest Rate Rollercoaster Gets New Tracks

New formulas for setting rates aim to cut volatility. Translation: fewer surprise spikes that make your principal balance look like it's on a crypto bull run—without the upside.

2. Forgiveness Pathways Get a Detour Sign

Eligibility criteria expand, but so does the fine print. More borrowers qualify, yet the timeline to forgiveness stretches—classic government giveth and taketh away.

3. Repayment Plans Face a Consolidation Wave

Multiple existing plans merge into streamlined options. The goal? Reduce bureaucratic maze-running. The reality? A temporary headache followed by, hopefully, simpler math.

4. The 'Financial Hardship' Definition Gets a Reality Check

Income thresholds adjust, potentially pulling more borrowers into safety nets. It's a lifeline for those squeezed by inflation—or just bad at budgeting, depending on your cynicism level.

5. Servicer Accountability Enters the Chat

Stricter penalties for errors and delays. Finally, a consequence for customer service that makes you miss your bank's hold music.

Bottom line: These five changes won't erase student debt, but they'll redraw the battlefield. Some win, some navigate new complexity, and the loan servicers? They're just hoping you don't read the new terms too closely—after all, understanding finance is what got you into this mess in the first place.

KEY TAKEAWAYS

• The "One Big, Beautiful Bill" introduced several changes to student loans that will take effect in 2026, including the creation of a new income-driven repayment plan and a reduction in the amount that some students and their families can borrow.
• Loan forgiveness next year will be taxable again, and some public-loan workers could be blocked from forgiveness by the Trump administration.

From a new income-driven repayment plan to adjusted borrowing limits, changes are coming to your student loans in 2026.

The "One Big, Beautiful Bill" makes several significant changes to student loans and repayment plans. Many of these changes will take effect in 2026 and will particularly impact college freshmen or students taking out loans for the first time in the fall of 2026.

Why This Matters to You

Several changes occurred this year that will impact your student loans and forgiveness in 2026, some of which may affect how students and their families can pay for college. In some cases, borrowing student loans will be more expensive or unavailable, so it is essential to be aware of the changes and know how to adapt.

1. New Repayment Plan Expected to Roll Out

The Repayment Assistance Plan, also known as RAP, is the newest income-driven repayment plan and was created by the "One Big, Beautiful Bill."

This new student loan repayment plan, which adjusts payment amounts based on borrowers' income, is expected to be available on July 1, 2026. Existing borrowers can choose to enter this repayment plan or stay on their current plan.

Some borrowers may prefer the payments on the RAP because, depending on their situation, the RAP payments can be less expensive than other income-driven plans. In addition, the government will contribute at least $50 every month to some borrowers to help lower their loan balance.

However, Investopedia's reporting found that for many borrowers, particularly those with lower incomes, the RAP could end up costing thousands more in total. Currently, lower-income borrowers can qualify for $0 payments, but these payments will be eliminated under RAP, as it requires paying at least $10 per month.

2. First-Time Student Loan Borrowers in the Fall Will Not Have Access to Existing Repayment Plans

College students taking out loans for the first time in the 2026 fall semester will have a vastly different repayment landscape than what is currently available.

The "One Big, Beautiful Bill" ruled that students who first take out a loan on or after July 1, 2026, will not have access to the three existing income-driven repayment plans. Instead, the only income-driven plan accessible to them upon graduation will be the RAP.

According to Investopedia reporting, the average recently graduated single borrower will pay less on RAP than on existing income-driven plans. However, the average borrower with children WOULD pay more on RAP, mainly because the new income-driven repayment plan requires borrowers to pay at least $10 a month.

Additionally, the standard repayment plan available to them will differ and, in many cases, be more affordable than the current 10-year standard plan. The revised standard plan extends the repayment period for borrowers with a loan balance exceeding $25,000, resulting in lower monthly payments.

3. New Loan Limits Will Restrict How Much Students and Their Families Can Borrow

The "One Big, Beautiful Bill" implemented new loan limits that generally lower the dollar amount and the types of federal student loans available to students and their families.

Undergraduate students will not be affected by these changes, but their parents will be limited in the amount of Parent PLUS loans they can borrow both annually and in aggregate. It is estimated that nearly three in 10 Parent PLUS borrowers will be constrained by the new limit, according to a Brookings Institution analysis of data from the National Center for Education Statistics.

New graduate students will no longer be eligible to take out a PLUS loan, and depending on their major, they will be limited in the amount of unsubsidized loans they can borrow. More than half a million graduate students took out a Grad PLUS loan in the 2024-25 academic year, and medical students in particular are expected to face financing troubles with the new limits.

Graduate students and parents of undergraduate students who have already taken out a PLUS or other student loan before June 30, 2026, will not be subject to the new limits and will be able to borrow under the current loan limits for three more years, or until the student's program is completed.

Student loan experts predict that these new limits will result in more students and families taking out private student loans, which often have higher interest rates and fewer flexible repayment options compared to federal loans. Experts also recommend that students explore other financial aid options, such as grants and scholarships.

RELATED EDUCATION

4. Tax-Free Forgiveness Will No Longer Be Available

Borrowers who reached loan forgiveness thresholds between 2021 and the end of 2025 were exempt from federal tax on it. That rule, which the Biden administration temporarily implemented following the COVID-19 pandemic, will not continue in 2026 and subsequent years.

Borrowers who reached forgiveness in 2025 or before, but due to multiple lawsuits causing processing slowdowns, have not yet had their discharge granted, will still not have to pay taxes on it.

That means borrowers who have made 20 or 25 qualifying payments before 2025 ends on the Income-Based Repayment, Income-Contingent Repayment, or Pay as You Earn plans will receive their forgiveness tax-free—even if the forgiveness is granted in 2026.

However, for borrowers who reach forgiveness in 2026 or later, their forgiveness amount will be included in their taxable income, and they will be required to pay federal income taxes on it.

5. PSLF Forgiveness Eligibility Rules Will Change

The TRUMP administration recently finalized a rule allowing it to strip Public Service Loan Forgiveness from certain organizations next year.

The rule, which will take effect on July 1, 2026, allows the Department of Education to block non-profit workers from loan forgiveness under the PSLF program if the work of their organization is deemed "illegal."

Critics of the rule argue that this rule politicizes the PSLF program, which forgives the loans of public service workers and some nonprofit workers after they have made 10 years of payments. The Trump administration's rule could strip the eligibility for PSLF from workers of hospitals or nonprofit groups that support immigrant families, gender-affirming medical care for transgender youth, or diversity, equity, and inclusion.

The implementation of this rule may be delayed, as several student loan advocacy groups have announced they are taking legal action against it.