With Congress passing President Donald Trump’s sweeping “Big, Beautiful Bill” by a narrow 218-214 vote in the House, a dramatic reshaping of the federal student loan system is now imminent. Once Trump signs the nearly 900-page legislation into law, the landscape for current and future borrowers will shift significantly—particularly for those pursuing graduate education or relying on income-based repayment programs.
A New Era for Federal Student Loans
While the bill makes Trump’s 2017 tax cuts permanent and includes major rollbacks to environmental and social welfare programs, it also ushers in substantial changes to the way Americans borrow and repay student debt.
Here’s what to expect if the legislation becomes law:
New Borrowing Caps for Graduate and Professional Students
The bill sets new lifetime borrowing limits on federal student loans:
- $100,000 for graduate students
- $200,000 for medical and law students
These caps are expected to disproportionately affect students seeking advanced degrees, especially in high-cost programs.
Additionally, the bill imposes limits on loans for part-time students and reduces access to deferments and forbearance, which previously helped borrowers temporarily pause or reduce payments during financial hardship.
Simplified—But Stricter—Repayment Options
The student loan repayment system will be significantly streamlined, reducing the number of available plans to just two:
- Standard Repayment Plan: Fixed monthly payments over 10 to 25 years, based solely on the loan amount—not borrower income.
- Repayment Assistance Plan: Monthly payments set between 1% and 10% of discretionary income, replacing Biden-era income-driven plans.
Critics argue this change will disadvantage lower-income borrowers, as the new plans eliminate many of the affordability and forgiveness features previously available under Income-Based Repayment (IBR) or Pay As You Earn (PAYE).
Impact on Parents: Parent PLUS Loan Cap Introduced
Parents helping to fund their children’s college education will also see limits:
- A $65,000 cap will now apply to Parent PLUS loans.
- These loans will no longer qualify for repayment assistance programs, potentially increasing financial pressure on middle-income families.
The End of SAVE?
The Biden administration’s Saving on a Valuable Education (SAVE) repayment plan, which adjusted monthly payments based on income and offered eventual forgiveness, is now in limbo. With over 8 million borrowers enrolled, the future of SAVE rests on a pending court decision.
If the bill becomes law, borrowers in the SAVE program will be required to transition to a new repayment plan between July 2026 and June 2028, unless a legal intervention protects it.
Who Will Be Affected?
The new rules primarily impact future federal student loan borrowers—not the more than 40 million Americans already carrying student loan debt under previous terms. However, many existing repayment benefits will no longer be available to new borrowers starting in 2026.
Conclusion
Trump’s legislation aims to simplify the student loan system and reduce federal spending on education programs. However, the changes could raise costs for graduate and low-income borrowers, restrict access to higher education, and place new burdens on families. As the bill heads to the president’s desk for signature, students and parents alike are being urged to reassess their borrowing plans and explore alternative funding options.
Stay with Daily Euro Times for continued updates on education policy and how it may affect your finances.
