Trump’s “Big Beautiful Bill” Brings Major Shakeup for Student Loan Borrowers
President Donald Trump’s sweeping GOP megabill — dubbed the “One Big Beautiful Bill” — is poised to dramatically alter how millions of Americans repay their student loans. While the legislation is marketed as a simplification of the student aid system, critics warn it could increase financial pressure on low- and middle-income borrowers, especially part-time and graduate students.
Below is a breakdown of what student loan borrowers need to know.
🎓 New Repayment Rules: Fewer Options, Higher Costs
The bill consolidates existing federal loan repayment plans into just two:
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A standard fixed-rate plan, and
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A new Repayment Assistance Plan (RAP) tied to a borrower’s income.
While simpler on paper, the RAP plan calculates payments as a percentage of income without caps, meaning many borrowers may see monthly payments increase significantly compared to today’s income-driven plans. Some estimates suggest average borrowers could pay up to $3,000 more per year.
💸 Pell Grant Cuts Hit Hard
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Maximum Pell Grant awards will drop from $7,395 to $5,710.
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Only full-time students will remain eligible — a shift that removes aid access for working adults, single parents, and part-time students.
This change could disqualify hundreds of thousands of low-income students from receiving federal grant support and push them toward debt.
🎓 Graduate & Parent Loans: Borrowing Limits Imposed
The megabill imposes strict caps on previously uncapped federal loan programs:
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Graduate students will be limited to $20,500/year ($100,000 total).
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Professional programs (law, medicine) will allow up to $50,000/year ($200,000 lifetime).
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Parent PLUS loans are capped at $20,000/year, maxing out at $65,000 per child.
These changes could force students to seek private loans, which often carry higher interest rates and fewer protections.
🛑 Forgiveness and Deferments: Significantly Reduced
Several key protections are being dismantled:
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Economic hardship and unemployment deferments are eliminated.
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Public Service Loan Forgiveness (PSLF) is narrowed, and internships or residency time no longer count toward forgiveness.
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Loan cancellation for victims of school fraud or misrepresentation is also stripped.
For borrowers depending on these safeguards, this could mean fewer paths to loan relief during hardship or service.
🏛️ Institutional Oversight and Department Cuts
While student aid becomes stricter, the bill also tightens scrutiny on colleges:
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Institutions with low post-graduation earnings may face federal penalties.
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Oversight of federal loans will be shifted from the Department of Education to agencies like the Small Business Administration (SBA) — raising concerns about mismanagement and lack of expertise.
📊 Who Is Affected Most?
| Group | Impact |
|---|---|
| Full-time undergrads | Benefit from simpler structure |
| Part-time and nontraditional students | Lose Pell Grants and safety nets |
| Grad/professional students | Face borrowing caps, may need private loans |
| Borrowers relying on deferments | Lose protection during unemployment or hardship |
| Public service workers | Face fewer forgiveness options |
📌 Final Thoughts
While Trump’s megabill simplifies the loan system on paper, it raises the cost of borrowing, reduces protections, and limits access to aid for vulnerable students. Borrowers should prepare by reviewing current repayment plans, evaluating private loan options, and staying alert for policy updates.
