The 2026-27 FAFSA is open, and this is not a normal borrow-now-sort-it-out-later year for federal student loans. Students can use the form for school attendance between July 1, 2026, and June 30, 2027, while new federal rules that took effect July 1 have changed how some borrowers can borrow and repay.
The practical point is simple: before accepting the largest loan amount in an aid offer, families should check what kind of loan it is, whether the borrower is under the old or new rules, and what repayment plan will be available when the bill arrives.
That matters because defaults are already climbing. The Associated Press, citing Office of Federal Student Aid data, reported July 20 that about 9.5 million federal student loan borrowers are now in default, up from 5.3 million in June 2025. Default can damage credit and eventually expose borrowers to involuntary collections, even when enforcement timelines change.
Do this first
Start by separating grants, scholarships and work-study from loans. Free aid reduces the amount you may need to borrow; loans create a repayment obligation. If the offer includes both subsidized and unsubsidized undergraduate loans, understand the difference before choosing an amount. Subsidized loans are generally more protective because the government covers interest during certain in-school and deferment periods; unsubsidized loans begin accruing interest sooner.
Next, write down the loan disbursement date and program level. The Education Department said most provisions in its final rule take effect July 1, 2026, with some rehabilitation, deferment and forbearance provisions following July 1, 2027, and certain repayment-plan sunsets in 2028. The date matters because new loans can be treated differently from older loans.
Graduate and professional students should be especially careful. The Education Department's rule package says it phases out the Grad PLUS program, establishes new loan limits for graduate and professional students, and creates a new Repayment Assistance Plan alongside a tiered standard repayment structure. If a program's cost of attendance used to rely on Grad PLUS borrowing, the funding gap may now need a different plan.
Check these details before accepting loans
Look at the net price after grants, not just the headline tuition. A school with a higher sticker price can sometimes cost less after aid, and a school with a modest sticker price can still require borrowing for housing, food, transportation and fees.
Check the annual and lifetime limits that apply to the borrower. Undergraduate dependent students, independent students, graduate students, professional students and parent borrowers do not all face the same caps. If a school or program has also set a lower program-level loan cap, ask the financial aid office how that cap affects the bill due this term.
Ask which repayment plans will be available for the specific loans you are taking. The Department of Education says its final rule simplifies repayment by creating a tiered standard plan and a Repayment Assistance Plan. Current borrowers may still have transition rules, but a new borrower should not assume every older income-driven repayment option will be open indefinitely.
Parents should ask a separate question: whose debt is this, legally and practically? Parent PLUS loans belong to the parent, not the student, even when a family plans for the student to help. That can affect retirement planning, debt-to-income ratios and eligibility for certain repayment paths.
Common mistakes
The first mistake is treating the aid offer as a recommendation. Schools often list the maximum amount a borrower can take, not the minimum needed to finish the semester. If the budget works with a smaller loan, accepting less can reduce future interest and pressure.
The second mistake is waiting until repayment starts to learn the rules. A borrower who knows the repayment plan, servicer, expected monthly payment range and interest behavior before borrowing has more room to adjust the school budget, work hours or course load.
The third mistake is using private loans to fill a federal-loan gap without comparing protections. Private loans can be useful for some creditworthy borrowers, but they generally do not carry the same federal repayment, deferment, forbearance or forgiveness options. Compare the rate, fees, co-signer release rules and hardship options before signing.
When to get help
Use official tools first. Federal Student Aid says online FAFSA forms are typically processed in one to three days, after which students can review their FAFSA Submission Summary and schools can receive the information. If a school is missing a signature, tax information or a required contributor, fix that before assuming the aid offer is final.
Call the financial aid office with a specific list: loan type, disbursement date, interest rate, fee, repayment plan options, borrowing limit, and whether any program-level cap applies. For repayment questions on existing federal loans, use StudentAid.gov and the loan servicer's official channels.
This is general financial information, not personal financial advice. The safe rule is to borrow only after you can explain what happens in school, during the grace period, and under the first repayment plan you are likely to use.
