One Big Beautiful Bill Act: What’s Changing with Student Loans

One Big Beautiful Bill Act: What’s Changing with Student Loans

If you are, or plan to be, an enrolled college student, or if you are the parent of a college student, you may be in the process of planning how you will pay for college. If borrowing money is part of your plans, then it’s important for you to understand recent changes affecting federal student loans as a result of the enactment of the One Big Beautiful Bill Act (OBBBA). Some changes went into effect immediately following the bill signing on July 4, 2025, while others became effective on July 1, 2026.

Among the changes that may influence your financial planning for the 2026-27 academic year (and potentially beyond) are the following:

• Graduate PLUS loans have been eliminated for new borrowers.
• Graduate loan limits have been capped at $20,500 a year and $100,000 in total (with some exceptions for borrowers in the midst of their graduate experience); previously, graduate students could borrow up to the cost of their program. Students enrolled in programs leading to a professional degree have higher limits — up to $50,000 annually and $200,000 aggregate, depending on their circumstances.
• Parent PLUS loans now have an annual cap of $20,000 per dependent, with an aggregate cap of $65,000 per dependent; previously, PLUS loans were allowed up to the cost of the program. Additionally, parents no longer have access to income-based repayment plans.
• A new aggregate lifetime limit of $257,500 in federal loans is in place for undergraduate, graduate and professional degrees; previously, no lifetime limit had been specified.
• Established income-driven repayment plans, including the Saving on a Valuable Education (SAVE) plan, are being phased out and replaced with a new Repayment Assistance Plan (RAP) for Direct Student Loan borrowers. Borrowers with existing student debt should be notified by their servicer of repayment options, including RAP and the new Tiered Standard Plan.

Below, we offer additional insight into the elimination of Grad PLUS loans, plus ideas for identifying and comparing student loan options that may work for you. For more detailed information on OBBBA provisions that may affect how you finance college, visit studentaid.gov — the U.S. Department of Education’s Federal Student Aid website. The National Association of Colleges and Universities’ website — naicu.edu — offers information as well.

The elimination of Grad PLUS loans

Direct PLUS loans, federal education loans issued by the U.S. Department of Education to help cover college expenses not met by other financial aid, have traditionally been available to qualified parents of dependent undergraduate students and to graduate or professional students. While Parent PLUS loans are still available, although with new limits (see above), Grad PLUS loans are being phased out, per the OBBBA.

Here’s how the phaseout works: New graduate and professional students are not eligible to apply for PLUS loans going forward. However, those who are currently enrolled and who have received a Grad PLUS loan in the past may continue borrowing through the PLUS program for three academic years or the remaining expected time to finish their program, whichever is less. (Potential borrowers are subject to a credit check.)

What this means for new graduate and professional students is that funding they may have planned on getting through the Direct PLUS program is no longer available to them. There are other funding options, however — for example, Federal Direct Unsubsidized loans, college assistantships (teaching, research or administrative), scholarships and private student loans.

How to tap alternative college funding sources

If the OBBBA’s impact on federal student loan programs leaves you with a funding gap, you may want to check into these alternative sources of financing:

• Need-based grants - Reach out to the college’s financial aid office to see if you may be eligible for a grant. Some schools are expanding their institutional aid in response to new federal borrowing limits.
• Private student loans - Many financial institutions offer student and parent loans to help finance college. These loans differ from federal student loans in that they require a credit check and follow their institution’s rules for interest rates, repayment and borrowing limits rather than federal student loan guidelines.
• Employer tuition assistance - If you have a job, check to see if your company offers a tuition assistance program. Many companies do!
• External scholarships - Make sure you have applied for all the private, local and profession-specific scholarships you may qualify for. Use online scholarship search databases and reach out to your high school or college academic advisor, community groups, employers (yours or your parents’) and friends to see if they know of any opportunities.

Note: If you use a search database, never pay to apply for a scholarship or share sensitive information such as your Social Security number.

Applying for a private student loan

Thinking of applying for a private student loan? It’s not difficult to do, but make sure you choose a financial institution with an outstanding support team. They should listen to your plans, talk you through your options, and address all your questions and concerns. The terms, rates and fees involved when you finance college using private loans can vary widely from institution to institution, so be sure you thoroughly understand the details before you sign.

Dollar Bank provides access to a variety of financing options that other lenders may not offer. Explore our student loan offerings.

This article is for general information purposes only and is not intended to provide legal, tax, accounting or financial advice. Any reliance on the information herein is solely and exclusively at your own risk and you are urged to do your own independent research. To the extent information herein references an outside resource or Internet site, Dollar Bank is not responsible for information, products or services obtained from outside sources and Dollar Bank will not be liable for any damages that may result from your access to outside resources. As always, please consult your own counsel, accountant, or other advisor regarding your specific situation.