What will student loans look like after Trump's spending bill is signed?
Following a full day of negotiations July 3 and a 218-214 House vote, the "Big, Beautiful Bill" is just a Trump signature away from making 2017 tax cuts introduced during his first term permanent.
The bold, nearly 900-page bill sets narrow tax breaks for tips and overtime; launches new benefits for businesses, and rolls back former President Joe Biden's clean energy tax credits. It will also slash benefit programs like Medicaid, leaving nearly 12 million Americans uninsured and remove accessibility of the Supplemental Nutrition Assistance Program for 2 million people.
Trump, alongside the Republican-majority House and Senate, are also significantly shaping student loans by cutting the number of repayment plans available to borrowers. A Biden-era program that tailored payment requirements to the person's income will be replaced with a new fixed-rate program that would disadvantage lower-income families.
Those planning to continue their education beyond their undergraduate degree are slated to be impacted by new caps toward graduate, medical and law students. The bill also impacts how much parents can borrow to help their children pay for tuition.
Here's a breakdown on what borrowing federal student loans will look like if the bill is signed into law.
What are the new caps on student loans?
The bill would enforce a lifetime cap of borrowing $100,000 for graduate students as well as $200,000 cap for medical and law school students.
The legislation also reduces opportunities for deferments or forbearance and new limits on lending for part-time students.
How will student loan repayment be different?
Repaying student debt is expected to shift as the bill guts loan forgiveness programs that have been in place for years and alters payment requirements that previously benefited disadvantage lower-income families.
There are now just two repayment plans, including a standard repayment plan that allows borrowers to repay over 10 to 25 years based on their loan amounts regardless of income. The other is a "Repayment Assistance Plan" based on borrowers pay monthly payments between 1% and 10% of their discretionary income.
How are parents impacted?
The bill also sets a $65,000 cap on Parent PLUS loans, which are unsubsidized loans offered for parents aiming to support dependent undergraduate students.
These loans will also no longer be eligible for repayment programs.
What happens to the SAVE program?
The around eight million borrowers enrolled in Biden's SAVE (Saving on a Valuable Education) repayment plan will stay in limbo awaiting a judge's decision about the program's legality.
The bill requires SAVE borrowers to find a new repayment plan between July 2026 and the end of June 2028.
If they don't after July 1, 2028, then they will automatically be enrolled in the Repayment Assistance Plan based on discretionary income.
Which student loan borrowers are unaffected?
The new changes will most likely impact new federal student loan borrowers instead of the more than 40 million Americans already in student loan debt.
Contributing: Zachary Schermele and Sarah D. Wire, USA TODAY
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