Student loans are the second-largest category of consumer debt in the United States, behind mortgages. If you can write the tuition check from cash flow or taxable assets, the loan question becomes strategic rather than necessary: should the student borrow at all, and if so, on what terms? The answer is rarely “borrow because you must” — it is more often “borrow because the loan is cheaper than the alternative use of your capital,” or “borrow because the federal protections are worth keeping.” The trade between those two framings is what this section is about.
The 2026 borrower lives in a substantially different regulatory landscape than the 2024 borrower. The OBBBA, signed July 4, 2025, terminated the SAVE plan, created a new income-driven plan called the Repayment Assistance Plan (RAP) for new borrowers, eliminated Grad PLUS borrowing for new students, tightened the cap on Parent PLUS loans, and imposed lifetime borrowing limits on the unsubsidized program. The transition is dated: RAP applies to loans first disbursed on or after July 1, 2026; pre-2026 borrowers retain access to the Income-Based Repayment plan (IBR) but not the now-defunct SAVE, PAYE, or REPAYE plans. What follows describes the system as it stands in 2026.