3 ways Trump's big beautiful' bill will change how students and families pay for college

The spending and tax megabill President Donald Trump signed into law on July 4 contains a number of provisions that will change the way students and their families pay for higher education.

Aimed at reducing federal spending, the bill reshapes the current student loan landscape by placing limits on borrowing and reducing the number of repayment options available for some current and future federal student loan borrowers.

While former President Joe Biden focused on debt forgiveness and trying to help current borrowers afford their monthly payments, President Donald Trump and his administration have prioritized ensuring borrowers pay back their debts and stopping the nation's massive student debt load from growing.

Here are three key ways the bill will change how students pay for college.

1. Loan limits

Effective July 1, 2026, the bill places lower limits on how much graduate and professional students can take out in federal loans. Grad students will have an annual limit of $20,500, while professional students, like those in medical or law school, can borrow up to $50,000 a year.

Over the course of their studies, graduate students can borrow a maximum of $100,000 in federal loans and professional students can borrow up to $200,000. The bill maintains the current aggregate undergraduate borrowing limit of $57,500, bringing the total maximum borrowing limit up to $257,500 for students who borrow for undergraduate and professional studies.

Parents can borrow up to $20,000 per year per dependent through Parent PLUS loans, with a lifetime limit of $65,000 per student, beginning July 1, 2026.

The law eliminates Grad PLUS loans, which have allowed students to borrow up to the total cost of their education, minus any federal aid. Beginning in July 2026, no new Grad PLUS loans will be disbursed.

Current borrowers will be able to continue borrowing with the current loan limits and Grad PLUS loan availability through the end of their studies.

Students who are not enrolled full-time will have lower annual loan limits, proportional to the time they are enrolled. Part-time students taking half the number of credits to be considered full-time would have half the annual borrowing limit, for example.

The law also allows academic institutions to set their own, program-specific borrowing limits beginning July 1, 2026.

2. Pell Grant changes

Pell Grants are federal student aid awards that help low-income students pay for college. The grants are worth up to $7,395 for the 2025-26 school year and do not need to be repaid, except in certain cases, according to Federal Student Aid.

Limits on Pell Grant awards

The new legislation doesn't change the maximum Pell Grant award — which is determined by Congress each year — but places a new limit on Pell Grant awards starting in July 2026.

Students whose Student Aid Index is double the maximum Pell Grant or more will not be eligible to receive any Pell funds. The Student Aid Index is a figure calculated when a student and their family fill out the Free Application for Federal Student Aid and is used by the Department of Education and academic institutions to determine students' aid eligibility.

The law also requires that foreign income be included when determining students' Pell Grant eligibility.

Added eligibility for workforce training programs

The legislation creates a new workforce Pell Grant program that allows students enrolling in workforce training programs, like HVAC, at community colleges to receive Pell Grants to help cover their costs beginning on July 1, 2026.

Eligible students are not enrolled in a program that leads to a graduate credential like a master's degree and have not already received such a credential. Eligible programs have between 150 and 600 hours of instruction or equivalent credit hours and last between eight and 15 weeks, among other requirements.

Qualifying programs must lead to a “portable” credential recipients can use with more than one employer. State governors must also approve programs for eligibility, confirming each meets employer needs in that state.

Remedial, non-credit, English language learning and study abroad programs, as well as unaccredited programs, are not eligible for workforce Pell Grants.

3. Fewer repayment options for federal loans

Students who take out federal student loans on or after July 1, 2026 will have just two repayment options when it's time to start paying back their loans:

1. An updated standard repayment plan
2. A new income-based repayment plan called the Repayment Assistance Plan

The new standard repayment plan will have borrowers make fixed monthly payments for a term ranging from 10 to 25 years, depending on the amount they borrowed.

The Repayment Assistance Plan will set monthly payments between 1% and 10% of a borrower's adjusted gross income minus $50 a month for every dependent the borrower claims on their taxes. Borrowers earning $10,000 a year or less will have a $10 minimum monthly payment.

Payments for each income group will calculated be as follows:

• $10,001 to $20,000:1%
• $20,001–$30,000:2%
• $30,001–$40,000: 3%
• $40,001–$50,000:4%
• $50,001–$60,000: 5%
• $60,001–$70,000:6%
• $70,001–$80,000:7%
• $80,001–$90,000: 8%
• $90,001–$100,000: 9%
• $100,000 or more:10%

Additionally, borrowers with loans disbursed on July 1, 2027 and after will not have access to economic hardship or unemployment deferments.