What Trump’s Big Beautiful Bill Means for Your Student Loans
With the passage of President Trump’s One Big Beautiful Bill Act (BBB), the largest piece of legislation from this administration so far, Americans are expecting to see many changes roll out in the next few years. The bill is primarily aimed at health care reform and changes in taxation, but will also affect, among many things, employee benefits, military defense, and student loans. For students at Centenary, the majority of whom take out student loans to fund their education, many of the changes to Federal Student Aid will affect how they take out loans, how much they take out, and how they can pay them off.
One of the most significant changes to student loans is the phasing out of President Biden’s SAVE Act—the most progressive student loan forgiveness plan ever enacted for U.S. students. Citizens enrolled in the SAVE Act will have until 2028 to switch repayment plans, but as the plan is currently stuck in legal limbo, borrowers have a pause on minimum payments and interest aggregation. For most Centenary students, they have yet to begin their repayment programs and should plan to not have the SAVE Act available to them post-graduation.
Pre-BBB, borrowers had access to seven repayment plans. After the passage of the Big Beautiful Bill, students will have two options to choose between: the standard plan and the Repayment Assistant Plan (RAP). The standard plan includes regular monthly payments paid between ten and twenty-five years, depending on the size of student loans. RAP is the only income-based repayment plan available to new borrowers. The amount of repayment differs based on income level, but unlike previous income-based repayment plans, it takes thirty years to receive loan forgiveness rather than the twenty or twenty-five standard forgiveness under previous income-based repayment. RAP still qualifies under the Public Student Loan Forgiveness (PSLF) program which allows borrowers who work in certain public sectors (teachers, nurses, certain non-profit employees) to receive loan forgiveness after ten years. The BBB does restrict who qualifies for the PSLF, so students should check to see if their future employment still qualifies under new regulation, if they were planning on applying for the program.
Perhaps the item of most concern for current Centenary students is the new cap on lifetime loan distribution, especially for those of you considering graduate and professional degrees. While undergraduates will see no change to their student loan limits, students interested in pursuing an advanced degree post-grad will need to take note of the new financial system. Prior to passage of the BBB, both graduate students and students pursuing professional degrees were limited to a lifetime limit of $138,500. Now, graduate students, like those pursuing their master’s or doctorates, will be capped at $20,500 per year with a lifetime borrowing limit of $100,000, and professional students will have their cap raised to $50,000 per year with a lifetime cap of $200,000. Parent PLUS loans have been limited to $65,000 per child. All students are now capped at $257,500 per person for undergraduate and graduate loans combined.
Most of these changes go into effect over an extended period of time, some things, like the dissolution of the SAVE Act, won’t be realized until 2028—months before Trump’s final days in office. Many of the resolutions made in the Big Beautiful Bill have been challenged in court, and the specific details of each section have not been made clear to the agencies in charge of carrying out the act’s requirements. Right now, the Loan Simulator on studentaid.gov says only of the new legislation: “We will update Loan Simulator at a later date to reflect recent legislative changes.” As the BBB is put into place, make sure to stay up to date with your federal student loan provider so that you have the most up-to-date information available.