New Rules for Law School Loans: Limits, Repayment Plans, and What You Need to Know

On July 4, President Donald Trump signed into law a comprehensive budget reconciliation package, called the One Big Beautiful Bill Act, that makes significant changes to student loans and repayment plans.

Student Loan Borrowing

One of the key changes affecting aspiring law students is the elimination of the Grad PLUS Loan Program and stricter borrowing limits for federal student loans used to finance graduate and professional education. Beginning July 1, 2026, annual caps will be set at $20,500 for graduate students and $50,000 for professional students. In the aggregate, loans will be capped at $100,000 for graduate students and $200,000 for professional students. The lifetime borrowing cap will be $257,500 on all federal student loans, excluding Parent PLUS Loans. The bill provides an exception to the limits for borrowers currently enrolled in a program of study to allow them to complete their program.

Annual Cap

• Graduate student: $20,500
• Professional student: $50,000

Aggregate Cap

• Graduate student: $100,000
• Professional student: $200,000

Lifetime Cap

• Graduate and professional students: $257,500 ($200,000 for grad./prof. education, plus $57,500 for undergraduate education)

Schools will also be given the discretion to lower the loan limits in the new law for students or parents, as long as the limit is applied consistently to all students enrolled in the applicable program of study.

Proponents of these new limits believe that lowering the amount of federal loans available to students will cause schools to lower their costs. However, the consequence of the changes will be limiting access to higher education for low- and middle-income students.

Loan Repayment Plans

In addition to student loan borrowing, the bill also makes changes to loan repayment plans, narrowing options to a new standard repayment plan and a new income-driven plan called the Repayment Assistance Plan (RAP).

The new standard repayment plan will base the number of years in repayment on the amount of student loan debt:

Under the RAP, monthly payments will be calculated based on adjusted gross income (AGI) and number of dependents:

Like the Saving on a Valuable Education (SAVE) Plan, RAP cancels any unpaid interest each month, so balances won’t increase for borrowers that make their required monthly payments. Forgiveness will be provided after 30 years of repayment.

Borrowers with new loans after July 1, 2026 will have to choose between these two plans. Meanwhile, current borrowers that do not take out new loans after July 1, 2026 may remain enrolled in the existing standard, Income-Based, Graduated, or Extended repayment plans, or could enroll in the new RAP. However, current borrowers enrolled in the Income-Contingent Repayment (ICR), Pay As You Earn (PAYE), or SAVE plans must transition to the new standard or RAP plans by July 1, 2028. If borrowers do not select a plan by that date, they will be moved into RAP.

Impacts on Borrowers

The One Big Beautiful Bill Act brings major changes to how law students fund and repay educational debt. Students will now need to closely manage borrowing, as loan caps and plan changes make funding more challenging.

The following sections outline tailored strategies and key considerations for future law students, current students, and recent graduates navigating these significant changes in student loan policy.

Future Law Students (Starting Law School in 2026 or Later)

This group will be attending law school under the new rules ending Grad PLUS Loans and limiting federal Direct Unsubsidized Loans to $50,000 per year. Many will face a funding gap and may need to rely more on savings, scholarships, or private loans, which often have fewer protections. To repay student loans, this group will use new tiered-term standard plans or the Repayment Assistance Plan (RAP), and Public Service Loan Forgiveness (PSLF) remains available only for federal loans.

Strategies: Optimize credit, maximize scholarships, track borrowing limits, compare private loan offers carefully, and crunch repayment numbers including loans across all federal and private sources.

Current Law Students (Rising 2Ls, 3Ls, or Starting in 2025)

Those already enrolled can finish their programs using Grad PLUS Loans (for the remainder of their expected time to credential) but must understand repayment plan changes as they phase in over the next few years. Rising 2Ls and incoming 1Ls borrowing loans after next summer’s cut-off date (July 1, 2026) may have to repay all loans under either the new standard or new RAP plans. Rising 3Ls will be able to borrow Grad PLUS Loans this year and have a choice of either the Income-Based Repayment (IBR) Plan or the new RAP moving forward, as long as they don’t borrow a new loan after next summer’s cut-off.

Strategies: Use federal loans first while you can, keep living costs low, look ahead to projected monthly payment after law school and match it against your projected starting salary, stay updated on requirements, deadlines, and broader repayment plan changes.

Recent Law Graduates (Class of 2025, 2026, and Earlier)

Graduates with existing loans can keep their current repayment plans for now, but SAVE, ICR, and PAYE plans will sunset by July 2028, requiring a switch to either IBR or RAP by then. PSLF and forgiveness programs still apply to existing loans.

Strategies: Stick with your current plan or evaluate whether another plan is right for you, pay attention to deadlines, refinance only if federal protections are unnecessary, and stay updated on policy changes.

Managing these changes requires staying informed, planning ahead, and seeking guidance if needed. To talk to an Accredited Financial Counselor^® about your specific situation, you can schedule free, 30-minute appointments via AccessConnex by AccessLex^℠.

Read our budget reconciliation bill fact sheet to learn more about the details of the bill that pertain to students and higher education institutions.