On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA), often nicknamed the “Big Beautiful Bill,” into law, It’s a sweeping budget-reconciliation package that encompasses tax cuts, healthcare reforms, and significant changes to federal student loans. Backed by a tie-breaking Senate vote (51–50) and a razor-thin House margin (218–214), it marks a major shift in higher-education policy.
Key Student-Loan Changes
1. Fewer Repayment Options
Instead of current options like SAVE, PAYE, and older IBR plans, the bill consolidates repayment into just two choices for future borrowers (loans disbursed from July 1 2026 onward)
- Standard Repayment Plan: Fixed monthly payments over 10–25 years, depending on loan balance.
- Repayment Assistance Plan (RAP): Income-driven, with monthly payments from 1–10% of income (minimum $10/month), and forgiveness after 30 years
Existing borrowers not in SAVE get to keep their current plan, but current SAVE participants must choose one of the new plans when re-enrolling
2. New Income‑Driven Plan: RAP
The Repayment Assistance Plan introduces nuanced payment tiers based on adjusted gross income (AGI):
- AGI $0–$10 k → $10/month minimum
- AGI $10–20 k → 1% AGI/yr
- AGI $20–30 k → 2% AGI/yr
- … Up to 10% AGI for those earning $100 k
Other features include:
- Forgiveness after 360 payments (30 years)
- No interest capitalization on unpaid interest
- $50/month principal matching from the government (
- Annual income recertification required, or your payments revert to the 10-year standard amount
- Married borrowers can file taxes separately to reduce AGI count, with child deductions applying only to those claimed on tax returns
Switching back to IBR loses RAP years from forgiveness eligibility—but previous IBR tenure is preserved
3. Caps on Grad & Parent PLUS Loans
The bill sets lifetime borrowing caps:
- Graduate & professional students: $100 k
- Professional (e.g. law, med) loans: $200 k
- Parent PLUS: $65 k lifetime cap
Currently, Grad PLUS covers the full cost of attendance—this drastically limits access for higher-cost programs like medical school
4. Program Elimination & Tightened College Accountability
The Grad PLUS program is eliminated, limiting graduate borrowing options to the new caps
Additionally, to curb low-quality programs, the legislation removes federal loan eligibility from colleges whose graduates earn below the median income of a high-school graduate in their state
5. Pell Grant Adjustments & Subsidized Loan Cuts
- Expands Pell Grant eligibility to include short-term vocational training programs
- Eliminates Direct Subsidized Loans, increasing reliance on unsubsidized federal loans
Critics argue these changes could burden low-income students and push borrowers toward more expensive private loans .
💬 Borrower Perspectives from Reddit
A top post on r/StudentLoans summarized the RAP plan:
“RAP would calculate your payment based on your total AGI, not discretionary income… $10/month minimum… payments [1–10% of AGI annually]… Forgiveness is reached at 360 payments (30 years)” (
The same conversation highlighted transparency issues:
- RAP years don’t count toward IBR forgiveness if you switch back.
- Parent PLUS borrowers must consolidate by June 30, 2026 and begin IDR payments by June 30, 2028 to qualify
Implications for Borrowers
Simplification? At What Cost?
Proponents argue that fewer repayment options simplify choices. But critics warn the two-plan system might not serve borrowers fairly across diverse financial situations. More Payment, More Years?
- RAP’s minimum $10 payment could increase costs for low-income borrowers previously eligible for $0 payments.
- With the standard plan extending up to 25 years, total interest paid may increase relative to current 10-year standard plans or 20–25-year SAVE.
Graduate Students Losing Flexibility
The new caps may force grad and professional students—especially those in high-cost programs—to seek alternative funding, like private loans, with higher interest and fewer protections
College Quality Pressure
By threatening loan eligibility based on graduate earnings, the law might push underperforming institutions to improve outcomes, but risks penalizing schools serving rural or disadvantaged populations .
Broader Context & Criticism
- The student-loan reforms are part of a $3.3–3.4 trillion deficit expansion over 10 years, funded in part by spending cuts to Medicaid and SNAP
- Many low-income programs are being cut—raising equity concerns .
- Critics warn the bill represents one of the largest upward wealth transfers in U.S. history
What Borrowers Should Do Next
- SAVE plan borrowers: Plan to switch into the new RAP or standard plans before your next recertification.
- Parent PLUS borrowers: To remain eligible for IDR, consolidate by June 30, 2026 and begin payments by June 30, 2028
- Graduate/professional students: Evaluate total borrowing needs carefully—existing loans won’t change, but future need could exceed new caps.
- All borrowers: Monitor guidance from the Department of Education—details on recertification, plan transitions, and interest treatment will be crucial.
Looking Ahead
- The Public Service Loan Forgiveness (PSLF) program isn’t changed by the law, but there’s concern that future rulemakings may restrict eligibility
- Administrative follow-up is expected on verifying borrower income, child deductions, and lender reporting.
- With a commitment to further reconciliation measures, more changes to education and fiscal policy could appear soon
Final Take
The Big Beautiful Bill dramatically reshapes student loan policy:
- Simplifies repayment, but at the risk of higher payments and longer terms.
- Introduces the new RAP system with complex tiers and annual recertification.
- Caps graduate and parent PLUS borrowing, potentially affecting future affordability.
- Preserves current plans for most existing borrowers (except SAVE participants).
For many borrowers, this means transitioning into unfamiliar programs—armed with new deadlines and changed financial outcomes. The coming months will be pivotal as borrowers—and colleges—adjust to this new reality.
Stay Informed
Track ongoing updates, plan changes, and educational guidance as the Dept. of Education rolls out implementation details. For positioned perspectives, check detailed coverage with credible commentary—see below