Changes to Student Loan Programs Under Trump's One Big Beautiful Bill Act

The U.S. Department of Education announced significant changes to student loan programs on Thursday, aligning with the provisions of President Donald Trump's One Big Beautiful Bill Act (OBBBA). These reforms include the elimination of the Grad PLUS loan program, caps on Parent PLUS loans, and the introduction of a new Repayment Assistance Plan (RAP) set to launch in July 2026. The changes aim to simplify the federal student loan repayment system and address concerns over rising tuition costs and unsustainable borrowing.

Grad PLUS Loans cancelled, Parent PLUS capped — How new US student debt rules could impact youNewsweekTND - The National DeskThe Hill

Under the new regulations, graduate students will be limited to borrowing $20,500 annually, with a lifetime cap of $100,000. Professional students will face a higher cap of $50,000 per year, totaling $200,000. The Department of Education has stated that these measures are necessary to prevent excessive borrowing and to hold universities accountable for educational outcomes. Nicholas Kent, Under Secretary of Education, emphasized that the reforms will help borrowers avoid "insurmountable debt" for degrees that do not yield adequate returns.

Grad PLUS Loans cancelled, Parent PLUS capped — How new US student debt rules could impact you

The reforms are expected to affect approximately 42 million Americans holding around $1.7 trillion in student loan debt. Critics, including the American Federation of Teachers, have expressed concerns that the OBBBA will exacerbate inequities in access to higher education by increasing loan repayment costs and reducing financial aid. The union described the legislation as a "big, ugly betrayal" that could deepen the opportunity gap for working-class individuals.

Grad PLUS Loans cancelled, Parent PLUS capped — How new US student debt rules could impact you

Nicholas Kent stated, “We appreciate the committee's efforts to assist the Department in implementing President Trump’s One Big Beautiful Bill Act... This will benefit borrowers who will no longer be pushed into insurmountable debt to finance degrees that do not pay off.” Conversely, Senate Minority Leader Chuck Schumer criticized the act, claiming it would lead to significant negative consequences for millions of Americans, including job losses and increased health risks.

TND - The National Desk

Opponents of the OBBBA argue that the changes will disproportionately affect low-income students and those seeking higher education. Schumer highlighted that the legislation could lead to "tens of millions" losing health insurance and facing increased financial burdens. Additionally, four U.S. cities, including Boston and Chicago, have filed lawsuits against the new Public Service Loan Forgiveness (PSLF) criteria, arguing that the changes undermine previous commitments to public sector workers.

Newsweek

As the Department of Education prepares to implement these changes, borrowers will need to stay informed about the new repayment options and eligibility criteria. Financial literacy experts, such as Alex Beene from the University of Tennessee at Martin, have advised students to monitor the evolving landscape of student loans closely, as many existing forgiveness programs will be integrated into the new RAP.

Grad PLUS Loans cancelled, Parent PLUS capped — How new US student debt rules could impact you

• “We appreciate the committee's efforts to assist the Department in implementing President Trump’s One Big Beautiful Bill Act, which will simplify our complex student loan repayment system and better align higher education with workforce needs,” — Nicholas Kent, Under Secretary of Education

TND - The National Desk

• “The law threatens death by a thousand cuts.” — American Federation of Teachers

TND - The National Desk

• “What would the American taxpayer think if we tell them that we’re going to forgive $12 billion and federal student loans, despite the fact that we haven’t actually looked at the merit of the claim?” — Education Department Official

The Hill

• “ Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: "Major changes will be coming to student loans next year that current and future students will have to keep track of and adjust to in the years ahead …” — Alex Beene, Financial Literacy Instructor

Newsweek

These sweeping changes to the student loan system mark a pivotal moment in U.S. education policy, with implications that will resonate for years to come.

Grad PLUS Loans cancelled, Parent PLUS capped — How new US student debt rules could impact you