&imwidth=800&imheight=600&format=webp&quality=medium "Trump's Big Beautiful Bill brings sweeping changes to US student loans from July 1")
US President Big Beautiful Bill is bringing sweeping changes to student debt, starting to take effect from July 1. The major overhaul of the system is part of the Working Families Tax Cuts Act, passed last year, targeting the US Department of Education. According to the Federal Student Aid office, nearly 43 million student borrowers have approximately $1.7 trillion in loans as of March 2026. This will fundamentally change how Americans borrow for and repay higher education loans.
End of Saving on a Valuable Education (SAVE)
The July 1, 2025, order passed by the Trump administration will ultimately end the SAVE plan of the Biden administration and force 7 million borrowers to change to a new plan within 90 days, which could potentially spike their monthly repayments. The Education Department has initiated a repayment calculator on its website, where students can calculate their monthly bill and repayment options.
Two repayment plans
There will be two repayment plans: the Repayment Assistance Plan (RAP) or the Tiered Standard repayment plan. The RAP will calculate the monthly bill based on the borrower's Adjusted Gross Income (AGI). The government will give a flat $50 discount per dependent instead of the government protecting a major chunk of the discretionary income. Every borrower will have to pay 1 per cent to 10 per cent of their income, at least $10 a month. Under the Tiered Standard repayment plan, a fixed repayment system depending on the borrower which will be applied to the borrower, regardless of the Adjusted Gross Income.
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Borrowing Limits
As of July 1, graduate students will be able to take out federal loans up to $20,500 per year or $100,000. For professional students, those who are pursuing a law or medical degree will be able to take $50,000 per year to $200,000. The prior limit was the “cost of attendance”, which was mostly $60,000 per year for medical students. The popular Parent PLUS loan for undergraduate students will be limited to $20,000 annually and $65,000 over the total course of a student's studies. The new limit will apply to students enrolling after July 1. Further, the Department of Education has said that certain healthcare studies, such as nursing, physician assistants and physical therapy, will not come under professional courses.
