Major student loan borrowing changes are just months away: what you need to know

Student loan borrowers will see sweeping changes in federal student aid starting July 1.

The Department of Education has finalized its Reimagining and Improving Student Education (RISE) plan, which introduces new repayment options and sets limits on loans for graduate students.

Parent PLUS loans

Parent PLUS borrowers are capped at $20,000 a year, with an aggregate cap of $65,000 per dependent. The lifetime loan limit is $257,500.

Graduate loans

The Grad PLUS loan program is eliminated and graduate loans are capped at $20,500 annually, with an aggregate cap of $100,000.

Professional student loans

Professional student loans are only eligible for the following programs:

Pharmacy
Dentistry
Veterinary medicine
Chiropractic
Law
Medicine
Optometry
Osteopathic Medicine
Podiatry
Theology
Clinical psychology

Programs such as nursing and social work are excluded from these loans and will only be eligible under graduate program limits.

Professional student loans are capped at $50,000 annually, with an aggregate cap of $200,000.

New repayment plans

Borrowers have two options for repaying student loans: the tiered standard plan and the repayment assistance plan.

Tiered Standard Plan

The tiered plan includes fixed monthly payment plans for 10 to 25 years, based on the borrower’s principal balance.

10 years: Owe $24,999 or less
15 years: $25,000-$49,999
20 years: $50,000-$999,999
25 years: $100,000 or more

Monthly payments will start at $50 per month.

“This structure allows borrowers with larger loan balances more time to repay,” the Education Department said in a news release. The minimum monthly payments will also help “borrowers make progress toward reducing their balance.”

Repayment assistance plan
The repayment assistance plan depends on a borrower’s income and family size. If borrowers make their payments on time, any unpaid interest will be waived.

The Education Department will lower the principal by an amount equal to what borrowers pay, up to $50 in total. Minimum monthly payments are set at $10.

“Borrowers pay more during years when their income is higher and less during years that their income is lower,” the Education Department said.

For married borrowers, monthly payment amounts will be prorated. This ensures that a spouse’s income is not counted twice or used in a way that negatively impacts the other spouse’s loans.

Borrowers may default on a loan twice over its lifetime. To return to good standing, they must make nine on-time payments. This change will take effect on July 1, 2027.