Big Changes Are Coming to Student Loans: What Families Need to Know
By Craig Boivin, UMassFive Federal Credit Union
Published in Northampton Living | April 2026
If you follow student loan news, you may have heard about the “One Big Beautiful Bill” (OBBB) Act. Part of the OBBB was designed to simplify student lending and repayment, representing the most significant change to federal student loans in decades. These updates will affect how families pay for college, and how borrowers repay their loans, starting in July 2026.
With new loan limits in place, many students and families may need to look beyond federal loans – after using scholarships and grants – to cover remaining costs. Private student loans, including those offered by credit unions, are likely to play a bigger role in filling those gaps.
What’s Changing for Parent PLUS Loans This Summer
Beginning July 1, parents who take out a new Parent PLUS loan will be limited to borrowing $20,000 per year, with a lifetime maximum of $65,000 per student.
For many families, that means Parent PLUS loans may no longer fill the full gap between aid and total college costs. In the past, these loans could cover up to a school’s full cost of attendance after scholarships and grants.
Upcoming Changes for Graduate Students
Grad PLUS loans, which previously allowed graduate students to borrow up to the full cost of attendance, will be eliminated for new borrowers starting July 1. Instead, graduate students will rely on Direct Unsubsidized Loans with new caps:
Most graduate students: up to $20,500 per year, with a $100,000 lifetime limit
Students in professional programs (like law or medicine): up to $50,000 per year, with a $200,000 lifetime limit
A new federal loan lifetime cap of $257,500 will apply (not including Parent or Graduate PLUS)
Simplifying Repayment with Streamlined Plans
Starting in July 2026, new borrowers will choose between just two plans:
A Standard Repayment Plan with fixed payments over 10–25 years, depending on loan size
A new Repayment Assistance Plan (RAP) that caps payments at 1–10% of adjusted gross income over 30 years, with potential forgiveness at the end
Repayment has long been one of the most confusing parts of student loans, with multiple plans and complex rules. The OBBB Act aims to streamline things with fewer, clearer repayment options and increased transparency so borrowers can see how payments are applied to principal, interest and fees.
Other changes on the horizon include:
Beginning July 2027, economic hardship and unemployment deferments will be eliminated for new loans, and forbearance options will be more limited—making it even more important to plan ahead for repayment.
By July 2028, current income-driven plans like SAVE, PAYE and ICR will be phased out. Borrowers on those plans will be moved to IBR or RAP if they don’t choose a new option.
What You Should Do Now – And How We Can Help
Craig Boivin
UMassFive College Federal Credit Union
Banking Services 413-256-5500 umassfive.coop
If you’re paying for college for the first time, pay close attention to the changes taking effect in 2026.
If you already have student loans, review your options so you’re not caught off guard.
If there’s still a funding gap after scholarships, grants and federal loans, explore private student loan options carefully – especially through a credit union.
Your education is a worthwhile investment in your future. UMassFive College Credit Union is here as a trusted resource to help you borrow wisely and repay confidently, with lending solutions, refinancing options, and expert support every step of the way.
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