What the One Big Beautiful Bill Act Means for Student Loans

If you follow student loan news, you may have heard about the “One Big Beautiful Bill” (OBBB) Act. It was designed to simplify student lending and repayment, and it will bring major changes to federal student loans for the first time in 60 years.

Here’s what you need to know and how these changes could impact you and your family.

Changes to Parent PLUS Loans

Parent PLUS loans are federal student loans taken out by a parent in their own name to finance a child’s education. Previously, these loans covered up to the school’s full cost of attendance, after scholarships and grants were applied.

For example, if the cost of attendance were $50,000 for one year and a student received $20,000 in scholarships and grants, they would need to borrow $30,000 for that year – and a Parent PLUS loan could potentially cover it all. That’s all changing next year.

New Parent PLUS Loan Limits

Starting July 1, 2026, parents are limited to borrowing $20,000 per year, with a maximum of $65,000 per student over a lifetime.

Changes to Grad PLUS Loans

Similar to Parent PLUS, Grad PLUS loans were designed for graduate students to cover up to the school’s full cost of attendance after scholarships and grants were applied. Starting July 1, 2026, the Grad PLUS loan will be completely eliminated as an option for new borrowers.

New Graduate Student Loan Options

The Grad PLUS program is being eliminated for new borrowers. Instead, graduate students can utilize Direct Unsubsidized Loans with limits of $20,500, with a $100,000 lifetime cap.
Students in professional programs (e.g., law, medicine) have higher caps: $50,000 per year, with a $200,000 lifetime limit.
A new overall federal loan lifetime cap of $257,500 applies, excluding amounts borrowed via Parent PLUS.

The Bottom Line

These new rules and loan limits mean students and families will likely need to rely more heavily on private student loans (like those offered by credit unions) to fill funding gaps once they have used up other sources of aid.

Changes for Student Loan Repayment

Repaying student loans has often been the hardest part, with multiple bills, due dates, and confusing repayment plans. The OBBB aims to simplify the process for federal student loans:

Streamlined Repayment Plans – Fewer, clearer repayment options designed to fit a range of budgets.
Greater Transparency – Borrowers can now more easily see how payments are applied to principal, interest, and fees.

New Repayment Plans

Existing Income Driving Repayment (IDR) plans—SAVE, PAYE, and ICR—will be phased out. Starting July 2026, only two plans will remain for new borrowers:

A Standard Repayment Plan, with fixed payments over 10–25 years, depending on the size of the loan.
A new Repayment Assistance Plan (RAP), which caps payments at 1%–10% of adjusted gross income (AGI) over 30 years, potentially leading to forgiveness after that period.

Borrowers currently on PAYE, SAVE, or ICR will automatically be moved into IBR (Income-Based Repayment) or RAP if they do not choose a new plan by July 1, 2028.

Keep in mind, these provisions apply to new federal student loans taken out July 1, 2026, or after. If you have existing student loans, you should carefully examine your options before the changes take place.

Deferment & Forbearance Changes

Starting July 2027, economic hardship and unemployment deferments are eliminated for new loans, and forbearance is more limited.

Key Takeaways

If you will be paying for college for the first time, pay careful attention to the changes being implemented July 1, 2026.
If you already have student loans (whether you are still in school or not), learn more about how these changes may affect your borrowing and/or repayment so you aren’t caught off guard.
If you need help covering college costs after you’ve used scholarships, grants, and federal student loans, carefully examine your options for private student loans from lenders like a credit union.

If you’re looking for a convenient solution to cover college funding gaps, check out our convenient private student lending options for flexible, reliable solutions to help pay for college.