The July 1, 2026 student loan changes (OBBBA): what changed and what didn’t
What changed on July 1, 2026
| Change | What it means |
|---|---|
| RAP launched | New income-driven plan: 1–10% of total income, no cap, waives unpaid interest, −$50/child. |
| SAVE ended | SAVE was struck down; borrowers must choose a new plan or be moved into a standard plan. |
| Grad PLUS eliminated | Professional-program borrowing capped at ~$50k/yr and $200k total, within a $257,500 lifetime federal limit. |
| PAYE & ICR phasing out | Being retired by 2028; IBR becomes the durable income-driven plan. |
| IDR forgiveness taxable | The tax-free exclusion expired at the end of 2025; long-term IDR forgiveness is federally taxable again. PSLF stays tax-free. |
| Consolidation timing | A consolidation finalizing on or after July 1 is treated as a new loan and is locked out of IBR. |
What did NOT change
PSLF is intact. It’s written into federal law, remains tax-free after 120 qualifying payments, and your already-earned count is protected. Residency and fellowship still count toward PSLF. IBR is staying. And current borrowers are grandfathered: if you took a federal loan before July 1, 2026, you keep the old rules (including Grad PLUS) for the lesser of your remaining program time or three years.
Key dates
- June 30, 2026 — deadline for a Parent PLUS consolidation to be disbursed and keep IDR/PSLF access.
- July 1, 2026 — RAP launches; new borrowing caps and the SAVE wind-down take effect.
- 2028 — PAYE and ICR fully phased out.
Who is most affected
Premeds and incoming students feel the borrowing caps most. Borrowers sitting in SAVE need to choose a new plan. Families with Parent PLUS loans face the June 30 consolidation deadline. Most residents and attendings with existing Direct loans keep PSLF and IBR and mainly need to pick the right plan.
Frequently asked questions
What is the OBBBA student loan change?
The 2025 reconciliation law overhauled federal student loans effective July 1, 2026: it created the RAP repayment plan, eliminated Grad PLUS and added borrowing caps, wound down SAVE, and let the tax-free treatment of long-term IDR forgiveness expire. PSLF and IBR remain.
Is PSLF going away in 2026?
No. PSLF is written into federal law, remains tax-free after 120 qualifying payments, and your already-earned payment count is protected.
Do I lose my old plan if I borrowed before July 2026?
Current borrowers are largely grandfathered. If you took a federal loan before July 1, 2026, you keep the old rules, including Grad PLUS access, for the lesser of your remaining program time or three more years.
Is income-driven forgiveness taxable now?
Federally, long-term IDR forgiveness is taxable again, because the exclusion that made it tax-free expired at the end of 2025. PSLF forgiveness remains entirely tax-free.
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