Student loans overhauled; Grad PLUS ended

Summary

H.R. 1 eliminated Grad PLUS loans, replaced existing income-driven repayment plans with a single Repayment Assistance Plan (RAP), and imposed new lifetime borrowing caps - with CBO estimating that the law's education title, mostly these loan changes, cuts federal direct spending by about $284 billion over 2025-2034 - while narrowing access to graduate and professional education and raising payments for many borrowers.

What happened

Effective July 1, 2026, the law ends Grad PLUS loans, sunsets the SAVE, PAYE, and ICR repayment plans (current borrowers moved off by 2028), creates the income-based Repayment Assistance Plan, and caps a student's lifetime federal borrowing at $257,500 (Parent PLUS loans are capped separately at $20,000 a year and $65,000 in total per dependent student). CBO estimated that the law's education title (Title VIII) reduces federal direct spending by about $284 billion over 2025-2034, mostly from the loan-repayment and borrowing-limit changes; the Committee for a Responsible Federal Budget has cited roughly $315 billion in student-loan savings projected at passage.

Impact on the United States

The new caps and the loss of Grad PLUS limit financing for medical, law, and graduate students, while the RAP raises monthly payments for many low-income borrowers compared with the SAVE plan it replaces. The federal saving CBO estimated is achieved by shifting more education costs onto borrowers.

Documented effects

1. Jul 2025CBO estimated the law's education title (Title VIII) reduces federal direct spending by about $284.0 billion over 2025-2034; the loan-repayment changes account for about $269.1 billion and the new loan limits about $44.2 billion, partly offset by Pell Grant changes and interactions.[2]
2. Jul 1, 2026Grad PLUS loans end and the SAVE/PAYE/ICR repayment plans sunset (borrowers moved to the new Repayment Assistance Plan by 2028), effective July 1, 2026, with a new $257,500 lifetime borrowing cap.[2][3]

Why this is rated significant

Eliminates Grad PLUS loans, replaces income-driven repayment with a single plan, and caps borrowing - with CBO estimating the law's education title cuts federal spending by about $284B over 2025-2034 but narrowing access to graduate and professional education and raising payments for many low-income borrowers.

Corrections & updates [3]

Every change to a fact on this page after publication is logged here, newest first.

1. Sep 29, 2026CorrectedSource

   Citation corrections: the Committee for a Responsible Federal Budget post is dated Feb. 6, 2026 (updated Feb. 9), is specialist analysis (Tier 3, not Tier 2), and cites "roughly $315 billion" in CBO-projected student-loan savings - it does not contain the $295 billion figure. The CBO document's published title is "Estimated Budgetary Effects of Public Law 119-21 ... Relative to CBO's January 2025 Baseline" (July 21, 2025). The borrowing caps are now cited to the law text, which sets a $257,500 lifetime limit per student (excluding Parent PLUS) and Parent PLUS limits of $20,000 a year and $65,000 in total per dependent student; the previous "$20,000 per child" wording omitted that it is an annual limit.[1][2][3]

2. Sep 29, 2026CorrectedFigure

   The entry said CBO scored the student-loan changes at about $295 billion in federal savings. That figure does not appear in CBO's estimate or the other sources. CBO's July 21, 2025 estimate of Public Law 119-21 puts the law's education title (Title VIII) at a $284.0 billion reduction in direct spending over 2025-2034; within it, the loan-repayment changes account for about $269.1 billion and the new loan limits about $44.2 billion, partly offset by Pell Grant changes and interactions. The Committee for a Responsible Federal Budget has cited roughly $315 billion in student-loan savings projected at passage. The entry now uses CBO's figure, attributed.[2][1]

3. Sep 29, 2026CorrectedCost estimate

   The ~$295B student-loan saving appears in no source. It now uses CBO's official table for the law as enacted: -$284.0B over 2025-2034 for the higher-education title (loan repayment, loan limits, delayed borrower-defense rules, net of the Pell funding increase). The 15-year figure is now derived from CBO's final-year number instead of an unsourced estimate. The ~$15B broader cost to borrowers had no source and was removed.

   Previously

   -$295B (10yr), -$350B (15yr), $15B broader

   Now

   -$284.0B (10yr), -$386.0B (15yr), $0 broader

Sources [3]