How will Trump's spending bill impact student loans?

Here's what the Republicans' domestic policy bill means for current and former students

Female college student in silhouette standing in a college library and looking at books
The bill would 'make college less affordable,' Lynn Pasquerella, the president of the American Association of Colleges and Universities, told The New York Times
(Image credit: Kilito Chan / Getty Images)

President Trump's recently passed spending package has implications well beyond the tax code. It will also introduce some major changes for student loan borrowers.

In short, the bill will "roll back student loan protections and cap the amount students can borrow for graduate programs," said The New York Times, making repayment options and borrowing opportunities fewer. While the changes are projected to result in government savings, there are concerns that they could further reduce college affordability.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE
https://cdn.mos.cms.futurecdn.net/flexiimages/jacafc5zvs1692883516.jpg

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

Repayment plans will be reduced to just two options

The new law "eliminates many loan repayment options for student borrowers, reducing available repayment options from a dozen to two," said U.S. News & World Report. Borrowers will soon have just two plans to choose from: a standard repayment plan and a new income-driven plan called the Repayment Assistance Plan.

The Repayment Assistant Plan, like existing income-driven plans, is "based on borrowers' adjusted gross income and number of dependent children," though it "gives less flexibility on repayment for borrowers in financial difficulty than previous income-based plans and creates a $200,000 federal student loan limit," said U.S. News & World Report.

Some borrowers will be able to keep their existing payment plan despite the new legislation. However, "those currently enrolled in SAVE, ICR or PAYE plans will have only the two repayment plan options," as will "borrowers whose loans are dispersed on or after July 1, 2026," said CNBC Make It.

Lifetime borrowing limits will be reduced for some borrowers

Under the new bill, graduate school, professional program and Parent PLUS loan borrowers will face limits on how much they can take out.

"The move will cap the amount of federal loans students can borrow for graduate school to $20,500 a year — with a total limit of $100,000 — and cap loans for professional programs, such as medical, dental or law school, at $50,000 a year, with a total limit of $200,000," said NBC News. Previously, the graduate PLUS program allowed borrowers to take out "up to the full cost of attendance for their education," said Business Insider.

Meanwhile, the Parent PLUS program, which "allows parents to take on student loans for their kids' educations," will now have "a $65,000 lifetime cap," said Business Insider.

Deferment will no longer be offered

Previously, a borrower could "apply for an economic hardship or unemployment deferment, which would allow them to pause their monthly bills and not accrue interest for an allotted amount of time, up to 9 years," said U.S. News & World Report. That will no longer be an option under Trump's One Big Beautiful Bill Act.

While forbearance is still available to temporarily pause loan payments, the bill places "new limits" on it, stating that "loans can't be in forbearance for more than nine months during any 24-month period," said Forbes.

Becca Stanek, The Week US

Becca Stanek has worked as an editor and writer in the personal finance space since 2017. She previously served as a deputy editor and later a managing editor overseeing investing and savings content at LendingTree and as an editor at the financial startup SmartAsset, where she focused on retirement- and financial-adviser-related content. Before that, Becca was a staff writer at The Week, primarily contributing to Speed Reads.