The FAFSA deadline arrives tomorrow, June 30, 2026, with just hours remaining for students to submit applications for federal aid ahead of sweeping changes to the federal student aid system that take effect July 1. The deadline marks the end of an era for the Biden-era SAVE repayment plan and the beginning of a major overhaul shaped by the One Big Beautiful Bill Act, which will reshape how millions of borrowers repay their loans.
Beginning July 1, the federal government is eliminating the Saving on a Valuable Education (SAVE) plan, which had allowed many low-income borrowers to make $0 monthly payments. In its place, borrowers will have access to two new repayment plans: the Repayment Assistance Plan (RAP) and a Tiered Standard Repayment Plan. The RAP charges 1% to 10% of a borrower’s adjusted gross income (AGI), with loan forgiveness available after 30 years, according to the Pennsylvania Higher Education Assistance Agency (PHEAA). A minimum monthly payment of $10 applies under RAP for borrowers with very low incomes.
The overhaul also imposes strict new borrowing limits. Parent PLUS loans, which previously had no cap, will now be capped at $20,000 per year and $65,000 total per dependent child, according to the U.S. Department of Education. Graduate PLUS loans are being eliminated entirely for new borrowers entering graduate or professional school on or after July 1, 2026. Graduate students will instead be limited to $20,500 in annual Direct Unsubsidized Loans.
All borrowers receiving new loans on or after July 1 will face a lifetime aggregate limit of $257,500 across all federal student loans, excluding Parent PLUS loans. This represents a significant tightening of borrowing access compared to previous rules that had allowed unlimited borrowing for graduate and professional students. Borrowers with existing loans issued before July 1 may retain access to legacy borrowing limits under a limited provision if they meet specific requirements, according to the University of Iowa Financial Aid office.
For borrowers currently enrolled in the SAVE plan, the transition is urgent. Loan servicers will begin issuing notices starting July 1, giving borrowers 90 days to select a new repayment plan. Those who do not choose a plan within that window will be automatically enrolled in the Tiered Standard Repayment Plan. According to the Department of Education, the RAP plan will waive remaining unpaid monthly interest when borrowers make on-time payments, ending the cycle of negative amortization that can occur when interest accrues faster than payments reduce the principal.
The changes stem from the One Big Beautiful Bill Act, enacted in July 2025. The law represents a significant shift in how federal student loans function, narrowing the range of repayment options available and imposing new constraints on borrowing, particularly for graduate and professional students. The student loan system overhaul takes effect July 1 with new repayment plans designed to simplify the landscape and reduce the number of choices available to new borrowers. Unlike the previous system, which offered multiple income-driven repayment options, new borrowers will be limited to the two plans created under the law.
Students still working to complete their FAFSA applications should note that the deadline is 11:59 p.m. Central Time on June 30. Any corrections or updates to submitted applications must also be completed by that deadline to ensure eligibility for federal aid in the 2025-26 academic year. For those who miss the federal deadline, some states and individual colleges maintain earlier priority deadlines with enhanced aid packages, though federal aid will still be available through the extended window.
Sources
- USA.gov — Confirmed federal FAFSA deadline of June 30, 2026
- Federal Student Aid (.gov) — Official updates on One Big Beautiful Bill Act and new repayment plans
- U.S. Department of Education — Press releases on federal loan changes effective July 1, 2026, and RAP plan features
- NPR — Coverage of SAVE plan ending and new repayment options
- PHEAA (Pennsylvania Higher Education Assistance Agency) — Details on RAP income-based calculations and forgiveness terms
- Georgetown University Office of Student Financial Aid — Explanation of $257,500 lifetime aggregate loan limit
- Citizens Bank — Overview of Parent PLUS loan caps and graduate student borrowing limits
- The Institute for College Access & Success (TICAS) — Analysis of loan limits and repayment plan changes
- University of Iowa Financial Aid — Legacy provision details for existing borrowers
