Student Loan Overhaul Looms: How Trump’s “Big, Beautiful Bill” Could Change Borrowing Forever
Federal student borrowers are anxiously watching Washington after both the House and Senate passed President Donald Trump’s landmark spending package. Dubbed the “Big, Beautiful Bill,” the nearly 900-page legislation is now just a presidential signature away from enacting sweeping changes across the American economy, with the federal student loan system facing one of its most significant overhauls in years.
While the bill is grabbing headlines for making the 2017 tax cuts permanent and rolling back Biden-era clean energy credits, its provisions for student lending could reshape the financial future for millions of students and their families. The legislation aims to streamline the system by drastically cutting the number of repayment plans, capping borrowing amounts, and phasing out popular programs.
For anyone planning to rely on federal aid for their education, the landscape is about to change. Here’s a breakdown of what the future of student borrowing could look like.
New Lifetime Caps on Borrowing
The era of flexible borrowing for higher education is set to end. The bill introduces strict new lifetime borrowing limits that will primarily impact those pursuing advanced degrees.
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Graduate Students: A lifetime cap of $100,000.
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Medical and Law Students: A lifetime cap of $200,000.
Additionally, the legislation will reduce opportunities for loan deferment and forbearance and place new limits on lending for part-time students, making it harder for borrowers to pause payments during times of financial hardship.
A Shake-Up in Repayment Plans
The current system of multiple income-driven repayment options will be a thing of the past. The bill guts existing loan forgiveness programs and replaces the current structure with just two, more rigid plans:
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Standard Repayment Plan: Borrowers will repay their loans over 10 to 25 years based on their total loan amount, regardless of their income.
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Repayment Assistance Plan: This income-based option will require borrowers to pay between 1% and 10% of their discretionary income each month. This replaces more generous, tailored programs that benefited lower-income families.
Impact on Parents: Caps for PLUS Loans
Parents who help finance their children’s education are not immune to the changes. The bill sets a new $65,000 lifetime cap on Parent PLUS loans, which are crucial for many families trying to cover the rising costs of an undergraduate education. In a significant shift, these loans will also no longer be eligible for federal repayment programs.
What Happens to the SAVE Program?
The popular SAVE (Saving on a Valuable Education) plan, which has enrolled around eight million borrowers under the Biden administration, faces an uncertain future. While its ultimate legality is still being decided in the courts, the new bill ensures its demise.
Borrowers currently on the SAVE plan will be required to choose a new repayment plan between July 2026 and June 2028. Anyone who fails to make a choice by July 1, 2028, will be automatically enrolled in the new Repayment Assistance Plan.
Who Is and Isn’t Affected?
It’s important to note that these dramatic changes are expected to primarily impact new federal student loan borrowers. The more than 40 million Americans who already hold student debt will likely be grandfathered in under the old rules. However, for the next generation of students, the path to financing an education—and paying it back—is about to look profoundly different.
