New borrowing caps, repayment changes, and limits on forgiveness signal a sharp shift in federal higher education policy starting in 2026.
The Trump administration is moving forward with a sweeping reset of the federal student loan system, proposing changes that would affect how much students can borrow, how they repay their loans, and who ultimately qualifies for forgiveness. While framed by officials as an effort to “simplify” and “restore accountability,” the shifts could significantly reshape access to higher education for millions of borrowers — including Latino students, who now represent the fastest-growing segment of college enrollment in the United States.
At the center of the overhaul is legislation the administration has dubbed the “One Big Beautiful Bill Act” (OBBBA), alongside proposed rules released by the U.S. Department of Education in early 2026. Together, they signal a sharp break from the Biden-era expansion of income-driven repayment and forgiveness programs.
Lower Borrowing Caps, Higher Pressure
Under the proposed rules, new limits would be placed on federal student borrowing. Graduate students would be capped at $20,500 per year, while professional students would face a $50,000 lifetime cap, according to figures outlined by the Department of Education. Administration officials argue that tighter limits will curb tuition inflation and discourage excessive debt.
But higher education advocates warn that the caps may disproportionately affect first-generation and middle-income students, many of whom rely on federal loans to bridge gaps not covered by grants or family savings. According to the Hispanic Association of Colleges and Universities, Latino students are more likely to finance their education through loans while attending public universities with fewer institutional aid resources.
Repayment Plans Rewritten
Perhaps the most consequential change is the proposed elimination of existing income-driven repayment options, including the SAVE plan, which reduced monthly payments and expanded forgiveness timelines. In their place, the Department of Education has proposed a single “Repayment Assistance Plan” (RAP), designed to standardize payments and shorten repayment periods.
In a January press release, the Department said the goal is to “make higher education more affordable and simplify student loan repayment,” while reducing what it described as “open-ended federal liabilities.” The proposal is currently open to public comment.
Collections Resume — Then Pause
The administration has also moved to restart collections on defaulted loans, including wage garnishment and tax refund offsets, after a long pandemic-era pause. Following backlash from borrower advocates and state officials, enforcement was briefly paused again, underscoring the political sensitivity of the issue.
Forgiveness Narrowed
Finally, the proposed rules would tighten eligibility for some Public Service Loan Forgiveness pathways, raising concerns among educators, nonprofit workers, and healthcare professionals — sectors where Latino workers are overrepresented.
For now, most changes would not take effect until July 1, 2026, but advocates say borrowers should pay close attention. As college costs continue to rise, the debate over student debt is no longer abstract policy — it is a question of who gets access, who bears the risk, and who is left behind.
