Effects of the One Big Beautiful Bill Act on Student Loans
The 2025 "One Big Beautiful Bill Act," signed into law, brings significant changes to federal student loan borrowing for undergraduate, graduate, and professional students, effective from July 1, 2026. These reforms, which were not part of any bill signed by President Trump in 2018, affect the way students finance their education in the coming years.
One of the most notable changes is the introduction of a universal lifetime loan cap of $257,500 for all federal loans, excluding Parent PLUS loans. This total covers all federal loans combined, including undergraduate and graduate loans, and includes loans that have been repaid or forgiven.
Graduate and professional students will now face a total cap of $100,000 and an approximate annual borrowing limit of $20,500. Professional students, such as medical, dental, or law students, have a cap of $200,000 total with an annual limit of $50,000. The Grad PLUS Loan program, which allowed graduate students to borrow up to the full cost of their graduate education, has been eliminated.
Parent PLUS loans will have new annual and lifetime limits of $20,000 and $65,000 per dependent, respectively, starting July 1, 2026.
Undergraduate students will not be affected by these changes as their loan limits remain unchanged. A grandfathering clause allows students enrolled as of June 30, 2026, to continue under existing loan borrowing rules for up to 3 more years or the remainder of their current program, whichever is shorter.
The changes also affect repayment plans, as the reduction in borrowing eligibility via the elimination of Grad PLUS loans may push more borrowers to private loans, which lack federal repayment protections like Income Driven Repayment and Public Service Loan Forgiveness.
Starting in July 2026, new student loan borrowers will have two payment options: the Standard Repayment Plan, which requires fixed payments over a 10-to-25 year period, and the Repayment Assistance Plan (RAP), which requires payments of 1 to 10 percent of the borrower's adjusted gross income over a 30-year repayment period.
These substantial reforms mark a new landscape for student loans starting mid-2026, affecting the way students finance their education in the coming years. It is crucial for students and parents to understand these changes and plan accordingly.
As the new student loan reforms approach in 2026, art enthusiasts might find themselves watching educational videos to better understand the changes, as the landscape of funding for higher education is set to transformation. Finance and business majors could delve into news articles to analyze the impact of the reduced Grad PLUS Loan program and increased repayment options on the economy. Meanwhile, those in the realm of education and self-development may find it essential to incorporate information about the revised loan limits into their courses or workshops, helping students and parents navigate the altered financial landscape.
