Are you a student loan borrower? Here’s how the “big, beautiful bill” could affect you.
After having already experienced the rabbit stroke in federal student loan policies from the pandemic, borrowers must again prepare for change.
The “big and beautiful bill” that President Trump Signed on July 4 REVIT the federal student loans system by reducing the number of reimbursement plan options for two and by placing the amount that individuals can borrow for higher education.
Here are changes in student loans reimbursements under the new budget law.
Reimbursement plan options
Known as Big Beautiful Bill Act, the new law eliminates a certain number of federal reimbursement of student loans, including the safeguard plan.
Current borrowers registered in the programs to be eliminated will have until July 1, 2028 to move on to a new plan. For the 7.7 million Americans currently registered in the Biden era safeguard plan, the interest collection will resume on August 1, the Ministry of Education announced on Wednesday.
From July 1, 2026, new student loans of student loan will choose between one of the two plans: a standard reimbursement plan or a reimbursement plan (IDR) focused on income called the reimbursement aid plan.
The standard reimbursement plan will allow borrowers of student loans to make fixed payments over 10 to 25 years.
The reimbursement assistance plan will allow borrowers to pay 1% to 10% of their income on a monthly basis, up to 30 years, said Aissa Canchola Bañez, director of policies at the Borrower Protection Center protection center at the Advocacy Group. It is a longer calendar than the current IDR plans, she said, which are currently 20 or 25 years old.
After the 30 -year mark, the borrower’s remaining loan balance will be canceled, as is currently the case after the end of the person’s reimbursement window.
The 5-year payment extension on income-based payments concerns Bañez, who said that “borrowers will be forced to be even longer,” she said.
However, Sarah Reber, a main woman from the Brookings Institution, a Washington -based reflection group, DC, described the binary repayment options a “enormous improvement” from the point of view of the design of politicians. The current system is confusing for borrowers given all the options they must choose, she told CBS Moneywatch.
Pell subsidies
The new law tightens the qualifications for the Pell grant program, the greatest source of federal aid for low -income students. Since 2021-2022, approximately 92% of Gell Grant beneficiaries had a total family income at $ 60,000 or less, according to Congress.gov.
Within the framework of “large and beautiful invoices” students who receive a complete scholarship from the college or the university they frequent will no longer be eligible for additional funding within the framework of the PELL Greases program.
The budget law also increases the control of the student aid index, which is used to determine the size of the eligibility for the federal aid of an individual. Consequently, high -income families will find it more difficult to obtain funding from PELL grants, according to the American Senate, Education, Labor and Pensions Committee (Aid).
The law expands the eligibility for Pell subsidies to students in labor programs.
Borrowing caps
The new law establishes borrowing caps on certain loans from July 1, 2026.
Parent loans more, which are federal loans available for parents of undergoing under -cycle students, will now be limited to $ 20,000 per year and $ 65,000 in total ceiling. This is a change compared to the current limit, which is equivalent to the total cost of attendance at least any student helps than the student receives.
The new bill also removes grade more loans, which help people finance higher education diplomas. From July 1, 2026, new students will no longer be able to request loans. However, current borrowers will be accessible to acquired rights and always authorized to access loans, according to Edsource.
Graduated students looking for unubnted federal loans for professional diplomas, such as law or medicine, will be limited to $ 50,000 per year and a life ceiling of $ 200,000. Those who are looking for advanced diplomas in non -professional areas, such as history or philosophy, will be limited to an annual borrowing ceiling of $ 20,500 and a lifetime ceiling of $ 100,000.
In a statement to CBS Moneywatch, the association of American Medical Colleges spoke about these changes, claiming that they will “create important financial obstacles to the attendance of the School of Medicine”. According to the non -profit group, around 40% of medical students relied on graduates and historically to finance their studies.
Economic difficulties, postponement of unemployment
From July 1, 2026, the postponement provisions for borrowers faced with economic difficulties will be eliminated under the “large and beautiful bill”.
Currently, student loan borrowers can request up to 3 years of postponement depending on economic difficulties or unemployment, according to the Federal Aid Website for Students.
