August is often the last hurrah of summer—pool parties, back-to-school sales, and squeezing in every bit of sunshine. But for the one in six American adults with student debt, fall also brings less-welcome considerations: loan interest, repayment changes, and the big question, “What does this mean for me?”
This year, there’s even more to unpack. On July 4, 2025, the One Big Beautiful Bill Act became law, ushering in major changes to the federal student loan system. While some rules take effect immediately, many shift in 2026 and beyond—giving borrowers a window to adjust their strategy.
Here’s what’s changing, who’s most affected, and steps to take now.
Loan limits
Repayment plan overhaul
Pell Grant expansion
Reduced relief options
Other notables
If you’re pursuing Public Service Loan Forgiveness (PSLF) or income-driven repayment (IDR) forgiveness, the shifting rules could impact your entire payoff plan. Deadlines—especially July 1, 2026—are critical.
High-income borrowers in the SAVE Plan should pay close attention: payments in SAVE’s current forbearance status may not count toward forgiveness, and switching to another IDR plan now can lock in lower payments based on today’s income.
Repayment options depend on when you first borrowed:
Parent PLUS borrowers: consolidate before July 1, 2026, to access IBR and avoid being locked into the 10-year standard plan.
RAP launches by July 1, 2026, for new borrowers.
Private refinancing may lower your interest rate, but you lose federal protections like PSLF and IDR forgiveness. It’s only smart if you plan to pay off your balance in full without federal program benefits.
The new loan caps mean future grad and professional students may not cover tuition with federal loans alone. This shifts the gap to savings, private loans, and scholarships—especially for high-income families who don’t qualify for need-based aid.
Three steps now:
The OBBBA reshapes student loans in ways that will be felt for decades—especially by high-income earners and families funding advanced degrees. Waiting until 2026 to react could mean missed opportunities, higher payments, or limited repayment options.
Now is the time to:
At Focus Partners Wealth, we help clients navigate these changes so that student loans don’t derail the bigger picture. The rules are complex, but the right plan now can set you up for a far smoother future.
Federal Student Loans: Before vs. After the One Big Beautiful Bill Act (OBBBA)
Area | Before OBBBA | After OBBBA |
Grad PLUS Loans | Unlimited up to cost of attendance | Eliminated July 1, 2026 |
Graduate Loan Limits | Unlimited up to cost of attendance | Grad students: $20,500/year cap ($100k lifetime); professional students: $50,000/year ($200k lifetime) |
Parent PLUS Loans | Unlimited up to cost of attendance | $20,000/year per student ($65k lifetime cap per student) |
Repayment Plans Available | Multiple IDR plans: SAVE, PAYE, ICR, IBR (old and new) | SAVE, PAYE, ICR sunset; New Repayment Assistance Plan (RAP) + IBR (old and new) only |
PSLF/IDR Eligibility for Parent PLUS | ICR or additional IDR plans via double consolidation anytime | Must consolidate before July 1, 2026, or lose IDR access |
Pell Grants | No funding for programs under 15 weeks | Workforce Pell Grants available for short-term programs (2026–27) |
Deferment & Forbearance | Unemployment/economic hardship deferments available; forbearance up to 3 years | Deferments eliminated for new loans after July 1, 2027; forbearance max 9 months in 24-month period |
Loan Rehabilitation | Only one opportunity after default | Second chance available starting 2027 |
FAFSA Asset Reporting | Family farms & small businesses counted as assets | Excluded starting 2026–27 |
Forgiveness Timelines | 10 (PSLF), 20, or 25 years depending on plan | PSLF stays at 10 years; IBR 20 or 25 years, RAP forgiveness at 30 years |
Tax Filing Impact for Married Borrowers | Some plans allow excluding spouse’s income when filing separately | Spousal income exclusion applies to new RAP program |
Sources: Congress.gov., savingforcollege.com, the American Enterprise Institute, the College Investor, studentaid.gov, the Education Department, and Forbes.
This communication is for informational purposes only. The content does not purport to present a complete picture, but Focus Partners believes the information is representative of issues and needs facing some clients. This should not be construed as specific investment, tax, or legal advice. Individuals should seek advice from their wealth advisor or other advisors before undertaking actions in response to the matters discussed.
This represents the opinions of Focus Partners, may contain forward-looking statements, and presents information that may change. Nothing contained in this communication may be relied upon as a guarantee, promise, assurance, or representation as to the future. This is prepared using third party sources considered to be reliable; however, accuracy or completeness cannot be guaranteed. All laws and regulations discussed are subject to change. The information provided will not be updated any time after the date of publication.
Services are offered through Focus Partners Advisor Solutions, LLC (“Advisor Solutions”) and Focus Partners Wealth, LLC (collectively referred to in this document as “Focus Partners”), SEC registered investment advisers. Registration with the SEC does not imply a certain level of skill or training and does not imply that the SEC has endorsed or approved the qualifications of the RIAs or their representatives. Prior to January 2025, Advisor Solutions was named Buckingham Strategic Partners, LLC, and Focus Partners Wealth was named The Colony Group, LLC. ©2025 Focus Partners Wealth, LLC and Focus Partners Advisor Solutions, LLC. All rights reserved. RO-25-4743851
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