Since President Donald Trump signed the One Big Beautiful Bill Act into law on July 4, new federal loan limits are set to go into effect.
The law also issued the elimination of certain repayment options and removal of Grad PLUS loans, prompting many college students to rethink whether and how they would finish their degrees, according to a new U.S. News survey.
Why It Matters
The One Big Beautiful Bill Act set new annual and lifetime borrowing limits for graduate and professional students that take effect for new loans beginning July 1 next year. The law also reduces the number of available federal repayment plans for some borrowers, creating immediate uncertainty for those planning graduate or professional degrees.
Due to the changes, millions of current and prospective students might face higher out-of-pocket costs or reduced repayment flexibility, and experts say those shifts could alter enrollment, degree choices and reliance on private credit for education financing.
What To Know
The U.S. News survey of 1,190 college students found 61 percent of students said they would be personally impacted by the law, and 35 percent said they were considering cutting back on schooling.
Roughly 32 percent were considering pursuing a different degree, and 38 percent said they were considering using private student loans to fill funding gaps.
“On social media, a lot of students feel like they’ve been sold a lie. Just a few years ago, coding was pitched as the next big career track. Now, many coders are already being replaced by AI, ironically by the very technology they built,” Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek. “That’s created real fear about pouring money and years into degrees that may not hold value.”
The survey also reported that student stress about paying for college increased after the law, with the share saying they felt “extremely” stressed rising from 24 percent to 31 percent.
The majority of college students also said they don’t support any of the law’s changes, at 51 percent. The changes that gained the highest approvals were the borrowing caps or the elimination of certain income-driven repayment plans, at just around 20 percent.
The exact ways college students will be impacted by the GOP law vary. In addition to around a third choosing to cut back on schooling or pursue a different degree, another 31 percent said they would consider going abroad to finish school, while 26 percent were thinking about joining the military to help pay for their college.
“The American Dream has always been the freedom and opportunity to attain a better life, and there is no better path up the socioeconomic ladder than higher education,” Drew Powers, the founder of Illinois-based Powers Financial Group, told Newsweek. “This law hurts student loan borrowers, which disproportionately hurts middle- and lower-income families, the same groups who need it the most.”
The One Big Beautiful Bill Act introduced various changes to the federal student loan borrower system, including annual and lifetime caps on federal borrowing for graduate and professional students and the elimination of the Grad PLUS program for future borrowers.
The caps would limit graduate borrowing to $20,500 per year with a $100,000 lifetime cap, and professional programs such as medical or law school would face annual caps of $50,000 and a $200,000 lifetime cap for loans taken after July 1, 2026.
“That means lower-income students will likely be priced out or pushed toward private loans that carry higher interest rates. Over time, that could widen the gap in access—especially for minorities trying to enter fields like medicine,” Thompson said.
“The government’s hope is that by removing subsidies, tuition costs will eventually fall. But whether that actually happens remains to be seen.”
Newsweek reached out to the Department of Education for comment via email.
What People Are Saying
Drew Powers, the founder of Illinois-based Powers Financial Group, told Newsweek: “This law essentially forces student and parent borrowers out of the federal student loan system and into the laps of the banks, which have proven time and again they are not going to be friendly to borrowers. The mere existence of federal loans forced the banks to offer more competitive interest rates in return for the lack of protections on the federal loan side. Once borrowers have maxed out their federal loans under the new law, the banks will not have any incentive to offer any friendly terms.”
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: “The changes coming to student loan distribution and repayment are significant, with the pathway to less expensive monthly payments and loan forgiveness becoming a more difficult one, if not impossible for students who are already in certain income brackets.
“Changes to loan distribution in 2026 could also make it more challenging to secure federally backed student loans for certain majors that fail to meet the new percentage income standards if those rules are strictly enforced. Combine all those new additions with currently high interest rates on new loans, and it’s easy to see why students are cautious on their academic road ahead.”
What Happens Next
The wide range of changes enacted by the One Big Beautiful Bill Act could mean falling enrollment at universities as more students opt for community colleges, Thompson said.
“If tuition at four-year schools doesn’t drop, demand for community colleges may push their prices up too,” Thompson said. “If that shift plays out, the result could be a wider gap in white-collar careers, with lower-income students getting pushed more toward trades.”
The post Trump Bill Student Loan Changes Spur New College-Goers to Reconsider Plans appeared first on Newsweek.
