Federal Student Aid & Department of Education Updates

What is the "Big, Beautiful Bill" and how does it affect student loans?

The "Big, Beautiful Bill" is new federal legislation that brings significant changes to federal student loan programs. It introduces new repayment plans, sets borrowing limits, and changes eligibility for certain types of aid. These updates will roll out gradually, with most major changes taking effect between July 2026 and July 2028.

When do the new rules take effect?

Key dates to remember:

• July 2026: New borrowing and consolidation rules begin. After this date, taking out new federal loans or consolidating may limit your access to current repayment plans.
• July 2028: Most existing repayment plans will be closed to new borrowers. If you’re already enrolled, you can usually remain on your plan, provided you don’t take out new loans or consolidate after July 2026.

FOR CURRENT BORROWERS

Will my current repayment plan change?

If you are already on an income-driven repayment plan, you can generally stay on it, as long as you do not take out new federal loans or consolidate after July 2026. If you do, you’ll need to switch to one of the new repayment options.

What happens to deferment and forbearance options?

Economic hardship and unemployment deferments will be eliminated under the new rules. Forbearance options will also be more limited. However, these changes will not take effect until at least July 2026, so current options remain available for now.

Can I still qualify for loan forgiveness?

Borrowers on existing plans can continue to pursue forgiveness under their current terms. Public Service Loan Forgiveness (PSLF) remains available, but eligibility requirements may change in the future.

FOR FUTURE BORROWERS

What are the new borrowing limits?

• Graduate Students: Grad PLUS loans will be eliminated. The new annual borrowing cap is $20,500, with a lifetime limit of $100,000 for graduate students and $200,000 for professional students in law or medicine.
• Parent PLUS Loans: There will be a new lifetime cap of $65,000 per student.

What repayment options will be available?

Starting July 2026, new borrowers will have two main options:

• Standard Repayment Plan: 10–25 years, depending on the loan amount.
• Repayment Assistance Plan (RAP): Income-based, with forgiveness after 30 years.

Will Pell Grants change?

Yes. Only full-time students will qualify for Pell Grants under the new rules, which may reduce aid for part-time, working, or caregiving students.

PLANNING AND NEXT STEPS

Do I need to take action now?

No immediate action is required. Most changes will not take effect until July 2026 or later. Use this time to review your current loans, repayment plans, and borrowing needs.

How can I prepare for these changes?

• Review your current repayment plan and loan status.
• Consider consolidating or making changes before July 2026 if you want to keep your current plan.
• Stay informed: The government will provide updates and reminders as key dates approach.

Where can I find more information or get help?

• Visit the U.S. Department of Education’s Federal Student Aid website for official updates.
• Contact LendKey’s customer service team for personalized guidance on your loan options.

ADDITIONAL QUESTIONS

Will private student loans be affected?

These changes apply to federal student loans. Private student loans through LendKey and other lenders are not directly affected, but more students may turn to private loans as federal borrowing limits tighten.

What should parents know?

Parents will face new PLUS loan limits starting in July 2026, and income-driven repayment will not be available for these loans. Review your family’s borrowing needs and explore all options.

Remember: These changes are designed to roll out gradually. Take your time, stay informed, and use the coming months to make the best decisions for your financial future.

Disclosure: *Private student loans should be used as supplemental funding after exhausting all sources of financial aid, including grants, scholarships, and federal student loans. Federal loans offer more attractive terms when compared to most other borrowing options, including private student loans. For more information on federal loans, visit http://studentaid.gov/.