Sweeping federal student loan changes take effect July 1, and experts warn most borrowers are not prepared for what's ahead.
"We could see people scrambling, delaying going to school, choosing a different program, using savings, turning to private loans," said Richard Richtmyer, senior editor of student loans at Credible, an online financial marketplace.
A new Credible survey finds Americans are largely unprepared or unaware of the 2026 federal student loan overhaul. In the survey, 61% of Americans ages 18-61 were unaware of the changes. Among those with student loans, 61% do not feel prepared.
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Loan changes could have wide-ranging consequences for families planning for college. Come July, Richtmyer said borrowers may find the federal loan option they were counting on is no longer available, or borrowing limits lower than they expected.
"The main message to take away here is don't wait until it's too late," he said.
Key changes borrowers face
One of the most impactful changes is new borrowing limits on Parent Plus loans. New Parent Plus loans will have a $20,000 annual cap and a $65,000 lifetime cap per dependent.
Another change: the elimination of Grad Plus loans. Current loans that can be used to pay for the full cost of attendance will be discontinued. While graduate students will still have access to federal financial aid, strict limits will apply, and borrowers may find themselves with a shortfall.
"It could mean people delaying graduate school, for example, or maybe choosing a lower-cost program," Richtmyer said.
The government is also phasing out most income-based repayment plans in favor of a single plan, the Repayment Assistance Plan, or RAP. The new, streamlined repayment plan is for new borrowers, but existing borrowers will be phased in over time.
Richtmyer said it's critical to understand how these changes impact your borrowing.
"Many borrowers will have fewer repayment choices," he said. "This isn't just a technical policy change. It's changing drastically how families plan for college costs."
Andrea Dona, a first-generation college student at San Diego State University, encourages others to apply for financial aid and scholarships to close potential funding gaps.
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"I just definitely have to apply to as many scholarships that are available," Dona said. "There's so many that I feel like people are not aware of and just using those resources."
The Trump administration argues the new loan limits taking effect this summer will curb excessive borrowing and force institutions to evaluate their costs. It says allowing graduates and parents to apply for the full cost of attendance has contributed to high levels of debt that many parent borrowers have struggled to repay.
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