Studen Loan Changes are Here!
Kevin Rego • June 9, 2026

San Mateo, CA


I usually write about IRS tax problems since my practice centers around IRS collection and audit resolution, however every once in a while some interesting tax and financial related items come across my desk that I think are worth mentioning.


If you have kids in high school looking ahead to college or kids in college looking at graduate school and you are wondering--how will I pay for this---this is article is for you.


Student Loan Changes are in effect:


Starting this July, the way students borrow money for college and graduate school is getting a significant overhaul. New rules will reshape borrowing limits, phase out certain loan types entirely, and for the first time, draw a sharper line between graduate and professional degrees when deciding how much a student can take on. Most of these changes kick in July 1, 2026, and affect federal loans first disbursed for the 2026–2027 academic year.


If your kids are already in school, take a breath — many of these rules won't touch you. They're largely aimed at incoming students. 


Undergraduate borrowing? Nothing changes.


For all the commotion surrounding these program reforms, undergraduate loan limits are staying exactly where they've been. Federal Direct Loans remain the main-stay of student aid for four-year programs, and the annual caps haven't moved.


Here's a basic breakdown:


Dependent students can borrow up to $5,500 in their first year, $6,500 in their second, and $7,500 annually after that.


Independent students get more room — $9,500 in year one, $10,500 in year two, and $12,500 per year from there on. Lifetime caps sit at $31,000 for dependent students and $57,500 for independent ones. These numbers haven't budged in years, and since they're not tied to inflation, they now cover a noticeably smaller slice of what college actually costs than they once did.


Dependent or Independent--What does that mean:


Whether a student qualifies as "independent" matters quite a bit here, since that status unlocks higher limits. Under Section 480(d) of the Higher Education Act, you're considered independent if you're 24 or older, married, have dependents of your own, are enrolled in a graduate or professional program, have served in the military, are an emancipated minor or ward of the court, grew up in foster care, or are a homeless youth — among a few other qualifying circumstances.


Because loans rarely cover the full bill anyway, most undergraduates piece together the rest through scholarships, grants, family contributions, 529 savings plans, part-time jobs, and sometimes Parent PLUS or private loans. 


Graduate students are facing the biggest changes.


This is where the 2026 reforms really have a bite. Under the old system, graduate students could stack Direct Loans on top of Graduate PLUS Loans, which allowed borrowing all the way up to the cost of attendance — tuition, housing, food, everything. That flexibility is gone. Graduate PLUS Loans are being eliminated for new borrowers.


Going forward, most graduate students will be limited to $20,500 per year, with a lifetime cap of $100,000 for all graduate borrowing. There is an exception carved out for a narrow tier of professional degrees: medicine, dentistry, law, and a few others. Those students can borrow up to $50,000 per year and $200,000 over the course of their studies.


Worth noting: unlike before, these new caps aren't pegged to the cost of attendance. That means federal loans may no longer stretch far enough to cover both tuition and living expenses, leaving students to find other ways to fill the gap.


Families borrowing through Parent PLUS loans will feel it too.


The changes don't stop with students. Parent PLUS loans — long used as an additional source of college funds— are also getting capped. Where parents could previously borrow up to the full cost of attendance, they'll now be limited to $20,000 per year per child, with a lifetime ceiling of $65,000 per student.

Since these loans land on the parent's credit and the parent is responsible for repayment, families who've relied heavily on Parent PLUS to afford higher-cost schools may find themselves rethinking their options. Scholarships, savings, and more affordable educational pathways are likely to become a bigger part of the conversation going forward.


Have questions about how this affects your family?


These changes may not show up on a tax return, but they're very much a part of your financial picture. Where loans in the past have made up a large part of financing college tuition and living expenses, new changes may limit those options.


Remember to always verify your circumstances with a college financial planner or college advisor. These are general provisions designed as an overview of changes. Your individual circumstances may vary.


Kevin Rego


Law Office of Kevin Rego

650.933.5222



Disclaimer: The information provided is intended to provide a general overview of the topic presented at the time of publication. Tax laws change and you should always consult a tax professional for the latest tax law. This article is not intended to be a legal interpretation of your individual tax or legal situation. If there is a conflict between the information provided and any legal authority implementing or interpreting the topic, the legal authority shall prevail. Always seek legal advice from a licensed attorney. This article does not in any way establish an attorney-client relationship. That relationship can only be accomplished with both parties signing a mutual, written agreement.

Receipt for That Donation? The IRS Wants More Than a Thank You Note!

By Kevin Rego • May 18, 2026
A recent U.S. Tax Court case is a cautionary tale every taxpayer who takes a charitable donation deduction on their annual tax return needs to hear. A couple donated a piece of land worth thousands of dollars to their city in the state of Utah. They had letters, a deed, city council records — a whole file of documents showing the donation was legitimate. They filed their tax return with the donation deduction and that is when things went haywire. The IRS disallowed the entire deduction. In subsequent litigation challenging the disallowance, the US Tax Court agreed with the IRS. Not because the donation was not real. Not because the land had no value. But because the paperwork did not say the right things. Here is what you need to know to protect your deduction. The Magic Number Is $250 If your charitable contribution — cash or property — is $250 or more, the IRS requires a Contemporaneous Written Acknowledgment (CWA) from the charity. “Contemporaneous” means you must have this document (1) on or before the date you file your return or (2) the due date of the tax return — whichever is earlier. Without it, if your charitable deduction is challenged by the IRS, your deduction is likely gone. What the Letter MUST Contain Under I.R.C. § 170(f)(8)(B), the CWA must include all three of the following: A description of what you donated. For cash, state the dollar amount. For property, describe what was received by the charity. The charity does not need to state the value — but they must describe what they got from you. An affirmative statement about whether the charity gave you anything in return for the donation. This is the one that trips up ALOT of taxpayers. If the charity gave you nothing — no dinner, no tickets, no tote bag — the letter must say so explicitly. Words like “donation” or "thank you" or "acknowlegement" or “gift” are not enough. The required language is simple: “No goods or services, in whole or in part, were provided in exchange for this contribution.” Silence on this point will cost you your deduction. If the charity DID give you something in return for the donation, it must be described and include an estimate of the value of what you received. For example: “Two gala dinner tickets with an estimated fair market value of $150 were provided in return for your charitable donation of $500”. For contributions to religious organizations or houses of worship, a statement to the effect of such goods or services consist solely of "intangible religious benefits" is often appropriate in this part. Close Is Not Good Enough In many areas of tax law there is a concept called substantial compliance — meaning if you got close enough, the IRS would cut you some slack. That doctrine does not apply here. The CWA requirements are strict, and a deduction will be disallowed in its entirety if the letter falls short — even if the donation was completely genuine and legitimate, like our couple from Utah. Before You File — Make sure everything is in order If you have made a significant charitable contribution and are not certain your acknowledgment letter meets the IRS requirements, contact the qualified charity before you file. It is far easier to get a revised or re-worded letter from the charity before your return goes in than to fight the IRS afterwards. If you've received an IRS letter or notice that and you're not sure what to do next, contact my office today for a consultation. Kevin Rego Law Office of Kevin Rego 650.933.5222 Disclaimer: The information provided is intended to provide a general overview of the topic presented at the time of publication. Tax laws change and you should always consult a tax professional for the latest tax law. This article is not intended to be a legal interpretation of your individual tax or legal situation. If there is a conflict between the information provided and any legal authority implementing or interpreting the topic, the legal authority shall prevail. Always seek legal advice from a licensed attorney. This article does not in any way establish an attorney-client relationship. That relationship can only be accomplished with both parties signing a mutual, written agreement.

IRS Letter in Your Drawer? Here's What That Envelope Is Actually Doing

By Kevin Rego • May 15, 2026
It starts with a simple envelope. It looks official, perhaps even polite. You see the Internal Revenue Service return address, feel that familiar jolt of anxiety, and tuck it into a kitchen drawer to deal with "later." But in the world of IRS collections, that envelope is not just a bill; it is the first trigger in a sophisticated, automated sequence designed to escalate until the government gets your attention! Most taxpayers believe the IRS can suddenly decide to freeze a bank account or garnish a paycheck willy nilly. The reality is much more methodical. The IRS follows a very specific roadmap of notifications, and understanding where you are on that map can be the difference between a simple payment plan and a financial disaster. Phase one is the Notice of Tax Due and Demand for Payment, often a letter with the title CP14. This is your early-warning signal. At this stage, the tone is relatively firm but professional. The IRS is giving you nudge--"hey, you may have forgotten about this bill". If you act here, you have the most leverage and the most options. Paying the bill or investigating collection alternatives are wide open. If that letter goes ignored, the sequence shifts. You will likely see the CP501 or CP503. These are formal reminders, but the temperature is rising. By the time the CP504 Intent to Levy lands in your mailbox, the IRS is no longer asking; they are telling you that they have the legal right to seize your property or income. This is the final stage of the "urgent" phase before you enter the "emergency" phase. The "gloves come off" and everything changes when you receive the Final Notice of Intent to Levy and Notice of Your Right to a Hearing. This letter is your last line of defense. It includes Form 12153, which allows you to request a Collection Due Process (CDP) hearing. Filing this appeal is often the only way to legally halt the collection machine and force the IRS to sit down at the negotiating table. If you miss the 30-day window following this letter, the IRS is legally cleared to start taking your money. There are some legal options that are still open with an equivalency hearing request, but that carries less "punch" than a CDP request. The most important thing to remember is that the IRS collection process is a series of escalating steps, not a single event. Addressing the issue in the early stages is always the best answer. IRS letter and notices are written in a dense, technical language that can be difficult to decode. If you have received a letter from the IRS and you don't know exactly what it means or how much danger you are in, please contact me today. I can send you a "tax letter translation" to help you understand precisely where you stand in the process and how we can work together to stop the letters for good. --- If you've received notice that your tax debt has been assigned to a private collection agency and you're not sure what to do next, contact my office today for a consultation. Kevin Rego Law Office of Kevin Rego 650.933.5222 Disclaimer: The information provided is intended to provide a general overview of the topic presented. It is not intended to be a legal interpretation of your individual tax or legal situation. If there is a conflict between the information provided and any legal authority implementing or interpreting the topic, the legal authority shall prevail. Always seek legal advice from a licensed attorney. This article does not in any way establish an attorney-client relationship. That relationship can only be accomplished with both parties signing a mutual, written agreement.