Trump's Big Beautiful Bill reshapes Federal Student Loans. See whole process, new borrowing limits, repayment options
Big Beautiful Bill
, marking a major shift in federal student loan policies. This new legislation reverses many Biden-era loan forgiveness efforts. It introduces strict borrowing limits, ends deferment options for future borrowers, reduces repayment plan choices and redirects support to workforce training over traditional college paths.
Borrowing Limits for Parents and Graduate Students
The Big Beautiful Bill introduces strict new limits on how much families and students can borrow from the federal government.
For the Parent PLUS program, the cap will be $20,000 per year, with a total maximum of $65,000 per child. These changes take effect July 1, 2026. Previously, parents could borrow up to the full cost of tuition.
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Graduate students will also see limits under the Grad PLUS program. Beginning in July 2026, general master's degrees will have a cap of $20,500 annually and $100,000 total. For professional degrees like law or medicine, the cap will be $50,000 annually and $200,000 total. These programs also previously allowed borrowing up to full tuition.
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Live Events
Unemployment Deferment Elimination
Under current law, borrowers who are unemployed or earning below minimum wage can pause their student loan payments.
However, the new bill will eliminate deferment options for federal loans taken out after July 2027. This change will affect new borrowers who may face hardships but still be required to continue repayment.
Repayment Options
The bill also reduces the number of federal
repayment plans
from seven to two.
Borrowers will now have to choose between a fixed-term repayment plan of 10 to 25 years or an income-based Repayment Assistance Program. The income-based plan requires borrowers to pay between 1% and 10% of their monthly income over a period of up to 30 years.
After 30 years, any remaining debt may be forgiven. This extends the forgiveness timeline from 20–25 years to 30 years. All current federal loan holders must choose one of the two new plans by July 1, 2028.
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End of SAVE Program and Role of Private Lenders
The SAVE program, which paused interest for around 8 million borrowers, will end on August 1. Interest on those loans will resume.
As federal options decrease,
private lenders
like SoFi expect an increase in demand. SoFi CEO Anthony Noto said the company is ready to step in where federal loans are reduced.
Private student loans generally come with higher interest rates and stricter credit requirements. Some may require co-signers. This shift may limit access for many families.
Focus on Technical and Career-Based Education
The White House said the new law is meant to reduce costs for taxpayers and encourage lower tuition from schools.
However, critics say it may lead more students to drop out or avoid college altogether. The bill encourages technical education by expanding Pell Grant eligibility to those in workforce training programs. At the same time, it limits Pell Grants for students receiving full scholarships at traditional colleges.
Betsy Mayotte, head of the Institute of Student Loan Advisors, told The Wall Street Journal that these changes are historic. 'Congress has never removed benefits from existing borrowers like this,' she said.
She also added that families must now look for more affordable education options due to funding limits.
FAQs
When do the new
federal loan caps
start under the Big Beautiful Bill?
The new loan caps for Parent PLUS and Grad PLUS programs begin on July 1, 2026, and apply only to future loans.
What happens to deferment options for unemployed borrowers?
Unemployment deferment will be eliminated for federal loans taken out after July 2027 under the Big Beautiful Bill.
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