New U.S. student loan laws, stemming from the "One Big Beautiful Bill Act" signed in 2025, drastically change federal student aid for new borrowers starting July 1, 2026, eliminating PLUS Loans for graduates, creating tighter borrowing caps, and replacing old repayment plans with a new standard plan and a single income-driven option, the "Repayment Assistance Plan" (RAP). RAP features longer repayment terms (up to 30 years), higher payments for many, but also interest subsidies to stop balance growth, while existing Income-Driven Repayment (IDR) plans like SAVE, PAYE, and ICR are phased out.
Borrowers working toward a professional graduate degree (think medicine or law) will have their borrowing capped at $50,000 a year. Parents and caregivers who use parent PLUS loans to help students pay for college will also see new loan limits. They will be capped at $65,000 per child.
Yes, student loan forgiveness continued in 2025 through existing programs like PSLF and Income-Driven Repayment (IDR) plans, but major changes occurred, with the SAVE plan facing a proposed end (pending court approval) and tax-free forgiveness ending December 31, 2025, meaning new discharges after that date could be taxable, creating uncertainty and urging borrowers to check their status on StudentAid.gov.
New Lifetime Borrowing Cap
The legislation introduces a total aggregate lifetime limit of $257,500 for all federal student loans combined. This cap applies to the total outstanding principal balance of all your federal loans (Subsidized, Unsubsidized, and Grad PLUS).
The "7-year rule" for student loans generally refers to when negative marks, like defaults, are removed from your credit report (around 7 years after the first missed payment or default date for federal loans, 7.5 years for private loans), but the debt itself doesn't disappear and must be paid off; it's also a benchmark in bankruptcy proceedings where federal loans can become dischargeable after 7 years from when payments were due, though proving "undue hardship" is required and difficult.
The maximum Maintenance Loan is £13,762. This is paid to students who will be living away from home and in London, and whose annual household income is £25,000 or less. And for more info on Student Loans in England, check out our main Student Finance guide.
I haven't paid my student loan in years — what should I do? Your first step is to get your loan out of default status. You can do this by either rehabilitating your loans through your loan holder or applying for debt consolidation through studentaid.gov. If you have private loans, you could refinance.
Plan 1: For students who started university before 2012. Loans are written off after 25 years or when you turn 65, depending on when you borrowed. Plan 2: For those who started from 2012 onwards. Written off 30 years after you first became due to repay.
You attend a high-cost institution with low graduation rates. Your student loan repayment timeline stretches over decades. Your degree doesn't lead to a stable or well-paying career. You end up in deferment or forbearance, accruing more interest than principal payments.
Interest began accruing under this forbearance on Aug. 1, 2025. This forbearance will last until the legal situation changes or servicers are able to send bills to borrowers at the appropriate monthly amount. Furthermore, time spent in this general forbearance will not count for PSLF or IDR forgiveness.
If the Department of Education (DOE) were abolished, federal student loans wouldn't disappear but would likely be transferred to another government body, possibly the Treasury or SBA, or sold to private entities, causing potential changes to repayment plans (like Income-Driven Repayment), servicing, and forgiveness programs, though borrowers would still owe the debt. The Higher Education Act provides a framework for these programs, suggesting congressional action would be needed, leading to potential uncertainty and disruption for the $1.7 trillion loan portfolio.
Annual Loan Limits
Can private student loans take your house? Until you default on private student loans, your house is safe. Private lenders must sue the borrower and get a judgment before putting a lien on a home or taking money from a bank account.
You qualify for student loan forgiveness through specific federal programs like Public Service Loan Forgiveness (PSLF) for government/non-profit workers, Income-Driven Repayment (IDR) Forgiveness after 20-25 years, and targeted relief for defrauded students (Borrower Defense) or the totally and permanently disabled, with new Biden-era rules also helping long-term borrowers, those with significant balance growth, or those who didn't finish school. Eligibility hinges on having federal loans and meeting specific work, payment, or circumstance requirements.
Who qualifies for 2022 student loan forgiveness? To be eligible for student loan debt cancellation, borrowers must have a 2020 or 2021 tax year income of less than $125,000 for individuals and less than $250,000 for married couples or heads of household.
The "7-year rule" for student loans generally refers to when negative marks, like defaults, are removed from your credit report (around 7 years after the first missed payment or default date for federal loans, 7.5 years for private loans), but the debt itself doesn't disappear and must be paid off; it's also a benchmark in bankruptcy proceedings where federal loans can become dischargeable after 7 years from when payments were due, though proving "undue hardship" is required and difficult.
There is no upper age limit for students applying for student finance but if the student is over 60 the amount they can get depends on their household income. Students can usually only get student finance for their first higher-education qualification.
Checklist of Documents to be submitted along-with duly filled Loan Application Form