Major changes to federal student loan rules took effect on July 1 limiting how much Americans can borrow and repayment options.
Changes made under the One Big Beautiful Bill will affect millions who have student loans.
The U.S. Department of Education (DOE) said changes were made to streamline the student loan system, which has seven repayment plans and is designed to rein in student loan debt, which is around $1.9 trillion.
Borrowers are encouraged to their loan servicers, and students check with their financial aid office for assistance during the transition.
The Parent PLUS loan program, which allows parents to take out a federal loan for their child's undergraduate education, will be capped at $20,000 a year and $65,000 total per student.
New borrowing limits will also affect graduate students as well. Grad students will still be able to take out up to $20,500 per year but the new cap is $100,000 per degree.
For people pursuing professional degrees, including those in pharmacy, veterinary medicine, chiropractic, law, medicine, optometry, osteopathic medicine, podiatry, theology and clinical psychology, according to the DOE. Under the new rules, students in those fields are restricted to borrowing $50,000 per year and $200,000 total.
The median cost of attending a public medical school is nearly $300,000 over four years, while it exceeds $400,000 at a private medical school, according to data from the Association of American Medical Colleges.
As of July 1, new student loan borrowers are blocked from Graduate PLUS loans, though borrowers will be grandfathered and will still be able to access the loans, according to EdSource.
Anyone who gets a loan on or after July 1 will have a lifetime loan cap of $257,500, according to the Education Department.
Meanwhile, borrowers who take out a new federal student loan will have only two repayment options: the Tiered Standard Plan and a new income-driven repayment plan called the Repayment Assistance Plan, or RAP.
Borrowers with existing loans who take out a new loan after July 1 will also be subject to the new rules and repayment of federal loans must be repaid under one of the plans.
Current borrowers who do not take out new loans after July 1 can continue to access the existing repayment options, which include Standard Repayment, Extended Repayment, Graduated Repayment, Income-Based, Pay As You Earn and Income-Contingent. Borrowers may also opt into the new Repayment Assistance Plan. As the Pay As You Earn and Income-Contingent Repayment are phased out borrowers enrolled in those programs must move to another repayment plan by July 1, 2028. Anyone enrolled in the standard, extended, graduated or IBR plans can stay put as long as they don't take out a new loan because those don’t sunset.
The new tax law also tightens eligibility requirements for the Pell Grant program. Students who receive non-federal grants or scholarships up to or exceeding the cost of their attendance will no longer be eligible for additional funding through the Pell Grant program.
The tax law also expands Pell Grant eligibility to students enrolled in shorterterm workforce training programs. Programs in fields such as nursing assistance, early childhood education and automotive mechanics could qualify under the new rules.