Brenda Quinn, EA •
The One Big Beautiful Bill Act (OBBBA) has some new changes taking effect July 1, 2026. These updates will impact students, parents, and graduates, addressing areas such as borrowing limits, student loan repayment options, educational assistance programs, and dependent care credits.
The One Big Beautiful Bill Act (OBBBA) has some new changes taking effect July 1, 2026. These updates will impact students, parents, and graduates, addressing areas such as borrowing limits, student loan repayment options, educational assistance programs, and dependent care credits.
Maximum borrowing limits will be in effect:
Student Loan repayment plans changes:
New Changes to Educational Assistance:
Dependent Care Credit:
The upcoming changes should be considered when borrowing or student loans, managing a 529 plan, savings for your child’s future, or claiming your dependent care credits on your tax return. Staying informed and planning for the new laws taking effect on July 1, 2026 is a great way to get ahead of the changes and ensure a smoother transition. If you need any additional information or have questions about the OBBBA act, please call Mason + Rich, P.A. at (603) 224-2000.
- For a Parents Plus loan, the maximum is $20,000 per child per year and the lifetime cap for each dependent will be $65,000.
- For grad students, Grad PLUS loans have been eliminated for new borrowers. The maximum unsubsidized student borrowing is $20,500 per year and a lifetime limit of $100,000. For those graduates pursuing a professional degree (many law/medical programs), the cap is $50,000 per year and a lifetime limit of $200,000.
Student Loan repayment plans changes:
- A new standard repayment plan will start July 1, 2026. Payments will generally be higher with a shorter time schedule.
- Existing income-driven repayment plans will be phased out by July 1, 2028. Borrowers who do not choose a new plan by July 1st, 2028 may be automatically assigned under transition rules.
New Changes to Educational Assistance:
- The 529 College Savings Plan will cover more expenses besides tuition. Books, testing fees, supplies and required equipment will be allowable expenses.
- There is a new MAGA (Money Accounts for Growth & Advancement) plan which starts in 2026. Keep an eye on our blog as more information on these accounts will be detailed in an upcoming post.
Dependent Care Credit:
- Starting January 1st, 2026 eligible families can claim up to $3,000 of qualifying expenses for one dependent or $6,000 for two or more dependents. The credit is still tied to AGI. The amount of the credit begins at 50% of the qualifying expenses for AGI under $15,000 and is gradually reduced to 20% of qualifying expenses for AGI greater than $105,000 ($210,000 for married filing jointly).
- Flexible Spending Accounts through your employer have an increased limit of $7,500 per household (previously $5,000). These plans are tax deferred and are a very good way to pay for child care expenses and save tax dollars.
The upcoming changes should be considered when borrowing or student loans, managing a 529 plan, savings for your child’s future, or claiming your dependent care credits on your tax return. Staying informed and planning for the new laws taking effect on July 1, 2026 is a great way to get ahead of the changes and ensure a smoother transition. If you need any additional information or have questions about the OBBBA act, please call Mason + Rich, P.A. at (603) 224-2000.
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