The senate just narrowly passed their version of the Big Beautiful Bill, and now it’s headed back to the House. While we wait for the House decision on the bill, and if there are changes, we can now predict some changes we expect to stick. And as for the Grad PLUS Loan program, this could be the end.
But what does this mean for graduate students? How will this, and other changes impact how all students pay for college.
What is Happening with Grad PLUS Loans?
Both the House and Senate versions of the bill so far have eliminated the Grad PLUS Loan program, which would take effect on July 1, 2026, which would be effective for the 2026-2027 academic year. For students who already borrowed a Grad PLUS Loan for June 30, 2026, and are still enrolled in their program of study, they will likely be grandfathered in to borrow for an additional three academic years, or until the completion of their program, whichever comes first.
However, with the end of the Grad PLUS Loans, a program which allowed graduate and professional students borrower up to the cost of attendance minus other financial aid received, each year with no aggregate loan limit.
Are Parent PLUS Loans Impacted by the Bill?
The Parent PLUS Loan program is likely to be modified in the final version of the bill. Parent PLUS Loans are facing borrowing limits, both annual and aggregate, per child. Both the House and the Senate bills set borrowing caps for Parent PLUS Loans to:
- Total annual limit per child in Parent PLUS Loans: $20,000
- Total aggregate limit per child in Parent PLUS Loans: $65,000
These limits mean that a child can have no more than $20,000 borrowed on their behalf, by all parents. And that no more than $65,000 overall in Parent PLUS Loans can be borrowed, by all parents. This cap limiting how much a child can receive can significantly change the parent's finance plan for their children.
Overall Loan Limits
The Senate bill has outlined changes to overall loan limits. While they did not change undergraduate loan limits, there were changes to graduate student, professional student, and parent borrowers. It is unclear where the bill will land on undergraduate loan limits, we do expect changes to graduate, professional and parents.
In addition, we did see the introduction to language regarding how aggregate limits will be applied. Currently, borrowers who reach their aggregate loan limit can pay down their debt and could be eligible for additional federal student loans. The Senate bill eliminates that ability, and once a student reaches their aggregate loan limit, they will no longer be able to borrow under the federal student loan programs, even if they pay down the debt or are offered forgiveness or discharge. This is something to keep an eye on.
How These Expected Changes Will Impact Students
The elimination of the Grad PLUS program, changes to loan limits, and other changes to federal student aid which may be a result of other actions, could have significant affect to students and their parents.
- Financial Gaps May Increase: Today, college costs are already challenging for families to manage. We have already seen some private colleges listing overall costs exceeding $100,000 per year, and with the added borrowing caps, and potential reduction in the Pell Grant next year, students may find themselves with a significant financial aid gap.
- Limited Financing Options: Graduate students may find themselves with limited options beyond the federal Direct Unsubsidized Loan Program, and parent borrowers limited with their ability to borrow PLUS loans, may find themselves seeking other financing options. Private student loan lenders may be able to offer competitive rates, but they will also require strong credit of the borrower (and/or cosigner), creating a barrier for many students.
- Scholarship Competition Will Increase: With these changes on the horizon, we will likely see an increase in scholarship activity. This is a viable option for many students; however, it does require an investment of time to win enough funds to cover financial aid gaps.
What About Repayment Plans?
The changes we anticipate will make it through to the final bill doesn’t just impact paying for college, but also impacts student loan repayment. Both bills significantly reduced the total number of payment plan options for borrowers, and introduced the new income driven repayment (IDR) plan, the Repayment Assistance Plan, also known as RAP.
Starting on July 1, 2026, we expect new borrowers to have two repayment plan options, the modified Standard Plan, and the RAP. We expect the phasing out of the other IDR plans, like Income-Contingent Repayment. Existing borrowers will likely have to elect a new plan by July 1, 2028. And we also expect there to be some changes to how Parent PLUS borrowers can repay and qualify for Public Service Loan Forgiveness.
From the proposed regulations, there are a lot of benefits borrowers may like seeing in the RAP option. However, both he modified Standard Repayment and RAP will extend repayment terms for many borrowers. While these plans may offer lower monthly payments, overall costs may increase from the extended repayment terms.
Managing the Changes Ahead
Like stated previously, we don’t know what will be in the final bill, but we can make some predictions. I predict an overhaul federal student aid program, which will likely impact a student’s financing plan. Here’s what you should be doing:
- Staying Informed. Stay updated on legislative developments regarding the Big Beautiful Bill. This massive bill may impact various aspects of your life, which means you may need change your plan accordingly.
- Explore Alternative Funding Options. With changes to overall loan programs and borrowing limits, it’s wise to understand your options. Look at sources like private student loans and talk to your school about financing options they are aware of. And of course, take some time to look at scholarship opportunities. Even if some changes don’t pass, using scholarships can be extremely helpful in reducing your debt at graduation.
- Plan Strategically. Take note of your overall financial needs. If you’re still a student, organize your finances, make a budget, and limit spending when possible. If you’re a student loan borrower, or entering repayment in the next few years, keep an eye on your repayment options and use online tools to predict your overall payments to help manage your future budget.
What’s Next?
The bill is headed to the House for discussion and a vote. The President has set a deadline of July 4, and while that may be a reach, it could happen.
Believe it or not, there have been significant changes made to the federal student aid program over the years. One of this size, we haven’t seen in years, but it has happened. Within the last two decades, we have seen the sunsetting of the Federal Perkins Loan program, and the Direct Subsidized Loan option for graduate students. The key takeaway? Life, and the financial aid programs changes, and so will you.