President Trump’s One Big Beautiful Bill Act passed July 1, 2025, and was officially signed July 4. The 2025-26 budget bill included changes in student borrowing power and repayment plans.
The legislation is a win with most Republicans, but the bill faced opposition, particularly from Democrats who said the bill would raise the cost of living, balloon the debt to $3 trillion, and threaten the healthcare and benefits of Americans.
From payments to loan limits to Pell grants, the act will impact college students throughout the country and here at Eastern Michigan University.
Student loans and borrowers
The nonprofit financial research group Investopedia reported that under the big, beautiful bill, new borrowers who hold more than $25,000 in student loans may receive smaller monthly payments than they would under older plans.
The original standard plan gave borrowers 10 years to repay loans. If a borrower wanted lower monthly payments, they could enroll in one of three income-driven plans: Income-Based Repayment, Income-Contingent Repayment, and Pay-As-You-Earn. However, the new legislation will eliminate those three income-driven repayment plans and revise the original standard one.
New borrowers will be automatically assigned to the revised standard plan, under which the repayment period varies depending on the loan size. This could give borrowers longer loan periods, meaning that they will pay more in the long run.
For borrowers who cannot afford the revised standard plan, there is another new option called the Repayment Assistance Plan, which uses a different calculation method.
The Repayment Assistance Plan calculates monthly payments based on adjusted gross income. This means single borrowers will pay less under the plan, but borrowers with families will have to pay more than if they were in the old Income-Based Repayment plan.
The new rules take effect for borrowers who take out loans starting July 1, 2026.
Loan limits
The legislation also changes loan limits for both graduate and undergraduate students.
The federal government will no longer allow graduate students to borrow enough money to cover tuition or related costs. The Grad Plus, a federal loan created in 2006 that let students borrow up to the full cost of attendance to pay for a graduate degree, will be eliminated.
The legislation states that graduate students can borrow up to $20,500 a year and a lifetime of $100,000. Professional students can borrow up to $50,000 a year and a lifetime of $200,000.
These limits are for the Federal Direct Unsubsidized Stafford Loans, and they will not be in effect until July 1, 2026.
Undergraduate borrowing limits for students remain unchanged. The Parent-Plus Loan has new limits of $20,000 in an academic year.
Pell grant and aid eligibility
BestColleges, a higher education resource group, reported that the legislation allows students to apply the Pell Grant to workforce training programs at a minimum of eight weeks. Previously, Pell Grants were applicable only to programs 16 weeks or longer.
Programs must meet the following requirements for students to qualify for the short-term Pell extension:
- Between 150 and 600 clocked hours of instruction
- Offered at the institution for at least a year
- Verified completion of at least 70% within 150% of normal time to completion
- Verified job placement rate of at least 70% measured 180 days after completion
- Tuition and fees not greater than the median earnings of completers or 150% of the federal poverty guidelines
However, while the legislation will make the Pell Grant applicable to more programs, it also aims to eliminate Pell Grant eligibility for students with a high student aid index beginning July 1, 2026.
State governors will be in charge of deciding which programs are aligned with the high-skill, high-wage, or in-demand industry sectors or occupations requirements.
