The “One Big Beautiful Bill” and Its Effects on Student Loans
By Lucia Delgado
President Trump’s “One Big Beautiful Bill,” signed on July 4th of 2025, has placed restrictions on federal student loan lending. This new legislation affects loan availability, repayment options, and the classification of professional versus graduate degree programs. Supporters assert that the new policies will encourage universities to lower the cost of tuition, while critics warn that they could make degrees less accessible––particularly in the field of nursing, which does not qualify as a professional program.
Borrowing Caps for Graduate and Professional Students:
One of the primary features of the bill is a lifetime cap on those seeking federal student loans. Graduate students (such as physician assistants, nurse practitioners, and physical therapists) are capped at $100,000 in their lifetime and may borrow up to $20,500 per year. Professional students (such as doctors, dentists, veterinarians, and chiropractors) are capped at $200,000 in their lifetimes and can borrow up to $50,000 per year. The bill defined professional degree programs as those designed to prepare students directly for specific licensed professions. These programs are skill-based, hands-on, and typically require certification from a regulatory or government body.
Previously, through the Grad PLUS Program, graduate students could borrow federal loans up to the full cost of attendance. Students were also allowed to use the loans to cover living expenses, as well as tuition. In the absence of Grad PLUS loans, students will likely seek out private loans, for which interest rates could vary from 2.89% to 17% APR, depending on the financial profile of the borrower.
Changes for Parents and Undergraduate Students
The bill does not include major changes for undergraduate borrowing programs. However, the bill does establish new limits for parents. Beginning July 1st, 2026, parents may borrow only $20,000 per year per child, which caps at $65,000 per child over their lifetime.
The law also sets a combined undergraduate and graduate federal borrowing limit of $257,500 per person.
Repayment Methods and New Federal Options
The bill also revises repayment rules. New borrowers will be offered repayment terms that range from 10-25 years, with fixed monthly payments. Republicans have also introduced the Repayment Assistance Plan (RAP), an income-based option that calculates monthly payments using the borrower’s adjusted gross income. RAP waives the leftover interest after a monthly payment is made, so borrowers will consistently see their balances going down.
While previous plans offered forgiveness after 20-25 years, RAP would extend that to 260 qualifying payments, or 30 years.
Then and Now
Previously, all graduate students could use federal loans to borrow up to the cost of attendance. These loans offered an interest rate of 8.94% APR and flexible repayment plans. With the “One Big Beautiful Bill,” students are capped at either $200,000 or $100,000, depending on the nature of their program. Students can make up the difference using private loans, if they so choose. However, loans acquired through private lenders, such as College AVE, Sallie Mae, and SoFi, typically offer higher interest rates and lack federal protections such as income-based repayment and loan forgiveness.
What College Connected Can Do For You
Navigating federal lending policies is hard, but we’re here to help! Our team will keep you updated as legislation is expanded and enacted. Our mentors will help you navigate the financial process and figure out the best way for you to fund your education. Our writing specialists will help you apply for scholarships to ease the burden of seeking a higher education. The College Connected community is here to help you take control of your academic future.
