Key Takeaways:
- The One Big Beautiful Bill Act (OBBB) was signed into law on July 4, 2025.
- Some provisions will start affecting college students on July 1, 2026.
- Changes include loan limits, fewer repayment options, Pell Grant adjustments, and more.
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The One Big Beautiful Bill Act, also known as the Big Beautiful Bill, OBBB, or BBB, was signed into law on July 4, 2025, by President Donald Trump. It has hundreds of provisions, including several that impact college students, the Free Application for Federal Student Aid (FAFSA), and the colleges themselves.
What the Big Beautiful Bill Means for College Students
The OBBB’s provisions will start impacting college students after July 1, 2026. We’ve provided a quick look at the major changes below. For more information on these adjustments, their exemptions, and how they could affect you, check out the American Council on Education’s (ACE) Bill Summary.
Different Federal Student Loan Limits
For parents, undergraduates, and grad students, federal student loans are receiving new caps and some changes.
- Grad PLUS program ending on July 1, 2026.
- New annual loan caps.
- $20,500 (for graduate degrees)
- $50,000 (for professional degrees)
- New lifetime loan caps.
- $100,000 (for graduate degrees)
- $200,000 (for professional degrees)
- New Parent PLUS loan caps.
- $20,000 per year per child
- $65,000 lifetime limit per child.
- New lifetime borrowing limits.
- Students can borrow up to $257,500 total in undergraduate and graduate federal loans.
Here’s an example of how these changes could affect a student.
Let’s say I only have a bachelor’s. I have never taken out loans for graduate or professional school.
- If I went for a Master’s in English, I would be capped at $100,000 in loans.
- If I went for a law degree (professional graduate), I would be capped at $200,000 in loans.
- If I went for a law degree (professional graduate), and then went to obtain an advanced law master’s degree, I would be capped at $200,000 – minus any loans I took out for my professional/original medical degree.
- If I went for a master’s in English and then to law school (professional graduate), I would be capped at $200,000 – minus any loans I took out for my English master’s.
Fewer Federal Student Loan Repayment Options
Students taking out federal loans after July 1, 2026, will also have fewer repayment options compared to earlier borrowers. The two options are:
- Income-based repayment plan: Borrowers must pay a minimum of $10 a month. The loan may be canceled after 30 years of repayment.
- Standard repayment plan: Borrowers pay fixed monthly payments over 10 to 25 years. The length of the term depends on the debt amount.
On July 1, 2027, borrowers will also no longer be able to access economic hardship or unemployment deferments. Forbearance will be reduced to 9 months over any 24-month period, down from 12 months at a time over 3 years.
PELL GRANT ADJUSTMENTS
After July 1, 2026, the Pell Grant can be used for job-training programs, such as certificate programs at community colleges.
In addition, the Pell Grant cannot exceed the total cost of attendance (COA) after other grant aid. For example, if a school has a COA of $20,000 and the student receives $20,000 in scholarships, the student can’t receive the maximum Pell Grant amount, regardless of their Student Aid Index (SAI).
And More
A few other changes that affect some college students include:
- New FAFSA Exceptions: For the 2026-27 award year, the FAFSA will include asset exceptions for family farms, small family businesses with fewer than 100 full-time employees, and family-owned commercial fishing businesses and related expenses.
- Expanded 529 plan use: Students can now use 529 college savings plans to help pay for select postsecondary credential testing.
- Medicaid work requirements: Medicaid recipients will have to meet the new work requirements in order to maintain their insurance or fall under one of the exemptions. Attending college at least half-time meets the requirements.
Changes for Colleges
Colleges also see some changes under the OBBB:
- Accountability earnings test: Undergraduate programs’ federal loan access will be dependent on how much their students earn after graduation. If the graduates’ earnings fall too low, the program can then lose access to federal loans.
- College endowment taxes: Institutions with endowments face a higher tax rate, going from 1.4% to up to 8%, depending on the total endowment. Previously, schools with 500 or fewer students were exempt from the tax – the bill increases the exemption to 3,000 or fewer students.
Many of the major impacts the OBBB has on students and colleges remain to be seen, especially as the Department of Education’s future is uncertain. Keep up to date on the latest by checking in with our blog or by visiting studentaid.gov/.
