The landscape of federal aid could be in for a seismic shift, thanks to ongoing changes in the "Big Beautiful Bill" making its way through Congress.
While most changes in this bill won’t take effect until July 1, 2026, it’s important for current and prospective college students to understand what could lie ahead. If you're planning to rely on federal student aid during your college years, you’ll want to keep a close watch on these potential developments.
What is the Big Beautiful Bill?
The Big Beautiful Bill (BBB) includes a significant overhaul of the federal student aid programs. It introduces major changes to loans, repayment plans, and school accountability.
The first version of the bill came from the House, followed by a version released by the Senate Health, Education, Labor, and Pensions Committee. Most recently, we’ve seen the latest iteration from the full Senate. The Senate is now under pressure to pass the bill, which will then return to the House for approval. President Trump has set an ambitious goal of having the bill passed by July 4 but meeting that deadline may prove challenging.
Key Provisions Affecting Federal Student Aid in the Big Beautiful Bill
There are some key provisions that will impact several aspects of federal student aid.
Eliminating Direct PLUS Loans for Graduate and Professional Students
Graduate students have long relied on Direct PLUS Loans to help cover the costs of their education. These federal loans don't have aggregate borrowing limits, making them a tool for programs with significant costs, like medical or dental school.
The bill proposes eliminating these loans entirely, which may force students to turn to private lenders for funding. Unlike federal loans, private loans often come with stricter credit requirements, potentially creating barriers for students who don’t meet these qualifications.
Parent PLUS Loan Limits
The bill introduces provisions that may significantly impact Parent PLUS borrowers. Specifically, it proposes setting limits on the total amount parents can borrow for a single child’s education. Additionally, it establishes overall aggregate loan limits for Parent PLUS borrowers, which could help address concerns about overborrowing. These changes aim to create more sustainable borrowing practices but may also require families to explore alternative funding options to cover remaining education costs. Parents considering a Parent PLUS Loan should review these limits carefully to plan effectively for their child’s education expenses.
- Parent PLUS: $20,000 per year, with a lifetime cap of $65,000 per child/student.
Separate Loan Limits for Graduate and Professional Students
The bill introduces new, separate loan limits for graduate students and professional students. While segmenting borrowing based on academic levels makes sense, this provision could still be restrictive for students entering high-cost graduate or professional programs, especially if PLUS Loans are eliminated.
This could also increase the reliance on other funding options, like private student loans.
- Graduate Students: $20,500 annual limit, $100,000 total limit.
- Professional Students: $50,000 annual limit, $200,000 total limit.
The graduate and professional limits will be in addition to what a student has already borrowed.
Changes to Student Loan Repayment Plans
One of the most significant proposed changes focuses on consolidating repayment plans. For new borrowers as of July 1, 2026, borrowers will have the option to two plans:
- A Standard Plan with fixed repayment terms based on total debt.
- A Repayment Assistance Plan (RAP) that simplifies current income-driven repayment structures.
Existing IDR plans, such as Income-Based Repayment (IBR) and Pay-As-You-Earn (PAYE), will be sunset, and borrowers will need to switch to one of the new repayment options by July 1, 2028.
Changes for Parent PLUS Borrower Repayment
Parent borrowers face specific challenges under the new provisions. Today, these borrowers can consolidate their loans into an income-contingent repayment plan. Existing borrowers with a Parent PLUS loan, which are enrolled in ICR can continue to repay in that plan through June 30, 2028. They will need to eventually switch to the modified IBR plan.
New Parent PLUS borrowers, on or after July 1, 2026, will only have the option to repay under the Standard plan, which will not qualify for PSLF. This does mean, that new Parent PLUS borrowers as of July 1, 2026, may not have a way to qualify for PSLF.
Pell Grant Program Updates
The BBB also addresses the Pell Grant program, which has been critical to improving access to college for low-income students. The bill will restrict Pell Grants to students whose aid covers their full cost of attendance. This may affect some institutional funding, as some schools will offer full ride scholarships, but still apply federal grant eligibility to help their aid stretch farther.
The bill also introduces the Workforce Pell Grant program. This will expand Pell eligibility to students in short term programs, which are determined to be in high demand in their locality by their state’s governor.
School Accountability Measures
The BBB also shines a spotlight on outcomes-based accountability for institutions. Federal aid will now tie into program earnings, comparing graduates’ incomes to the cost of their education.
Federal Aid is Changing. Are You Prepared?
The Big Beautiful Bill is a mixed bag for students. While there are changes which could help students, there are provisions which will make it difficult for students and parents on their path through higher education.
As the bill limit access to federal student loans, there may be issues covering the cost of college. In combination with other discussions, like Pell Grant reductions from the 2026 Budget Summary, there could be additional financial obstacles in affording higher education. And we may see students and parents seeking other methods to cover the costs of college—which continue to rise.
At this point, the bill is not enacted. However, we do not expect many of these proposals to take effect until July 1, 2026, or later. But it's incredibly important the students and parents stay informed.