Here’s How Trump’s ‘Big Beautiful Bill’ Could Impact Student Financial Aid
Credit: Kevin Dietsch / Getty Images News- The “One Big Beautiful Bill Act” combines tax breaks, spending cuts, border security funding, and other priorities for President Donald Trump’s agenda.
- Impacts to higher education include changes to eligibility for Pell Grants, the federal program designed to make college affordable for low- and middle- income families.
- Under the legislation, student loan borrowers would no longer be able to take out subsidized and Direct Plus loans.
The U.S. House of Representatives on May 22 passed the GOP’s “One Big Beautiful Bill Act,” which advances President Donald Trump’s agenda through tax breaks and cuts to education funding, Supplemental Nutrition Assistance Program (SNAP) benefits, and Medicaid.
In total, the Congressional Budget Office (CBO) in a report to the House Committee on Education and Workforce estimates the House bill will cut nearly $350 million from college access and affordability programs, with outsized impacts on student borrowers and Pell Grant recipients.
The bill moves to the Senate as part of the reconciliation process, and Republican leadership has set a July 4 deadline to pass it. Here are the biggest changes to financial aid if the bill as written by the House passes into law.
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Stricter Pell Grant Requirements
Only “full-time” students are eligible for the maximum Pell Grant, and this bill would increase full-time status from 12 credit hours per semester to 15 credit hours per semester.
The CBO, the nonpartisan economic and budget analytics arm of Congress, estimates that if the bill is passed, over half of current Pell Grant recipients will receive smaller grants and just a fifth of students will enroll in more credit hours to increase their award amount.
The CBO also estimates that if the bill is passed, over 3 million students would be impacted by the eligibility changes and approximately 700,000 students would lose eligibility entirely.
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Eliminating Types of Student Loans
The bill adjusts loan caps, payment plans, and who can qualify for certain loans.
If the bill is passed, student borrowers will no longer have access to subsidized and Direct Plus loans.
Subsidized loans are for undergraduate students demonstrating financial need. The federal government pays the interest on the loan if a student is in school at least half time, graduated within the past six months, or is in a period of deferment.
A Direct PLUS Loan is typically available to parents of dependent undergraduate students or to graduate and professional students.
Under the bill, parents would be able to take out Direct Plus Loans on behalf of their student only if the student maxes out their unsubsidized direct loans and the annual amount borrowed is less than the cost of attendance.
The maximum amount a student can borrow is $200,000 under the new bill, but a parent can borrow more if the student has hit their limit.
A New Income-Based Repayment Plan
The bill also consolidates the many federal repayment programs into a single income-based repayment plan.
Under this new plan, borrowers will pay a certain percentage of their income depending on how much they earn per year, with the lowest base payment being $120 a month and the highest being 10% of their income.
| Adjusted Gross Income | Base Monthly Payment |
|---|---|
| $10,000 or less | $120 |
| More than $10,000, up to $20,000 | 1% of income |
| More than $20,000, up to $30,000 | 2% of income |
| More than $30,000, up to $40,000 | 3% of income |
| More than $40,000, up to $50,000 | 4% of income |
| More than $50,000, up to $60,000 | 5% of income |
| More than $60,000, up to $70,000 | 6% of income |
| More than $70,000, up to $80,000 | 7% of income |
| More than $80,000, up to $90,000 | 8% of income |
| More than $90,000, up to $100,000 | 9% of income |
| More than $100,000 | 10% of income |
The bill also includes a standard repayment plan where borrowers choose a fixed payment over a certain period of time depending on how much is borrowed:
- Borrowed under $25,000: 10-year plan to repay
- Borrowed $25,000 or more, but less than $50,000: 15 years to repay
- Borrowed $50,000 or more, but less than $100,000: 20 years to repay
- Borrowed $100,000 or more: 25 years to repay
If a borrower still has debt after 360 months (30 years) of payment through the income-based repayment plan, the government will cancel it. Currently, the government would cancel loans after 20-25 years of income-driven repayment.
Impacts to Public Service Loan Forgiveness
A provision in the bill would allow the Treasury Department to revoke a nonprofit’s 501(c)(3) status if the administration deems it a “terrorist supporting organization.”
Borrowers who work for nonprofits qualify for the Public Service Loan Forgiveness (PSLF) program, which forgives student loans after 10 years of service. If a nonprofit loses its tax-exempt status, its employees would lose PSLF eligibility.
The Trump administration recently announced plans to redefine PSLF eligibility guidelines.
This came shortly after Trump signed an executive order directing the Department of Education to exclude employees from certain nonprofits from benefiting from PSLF. The House’s provision in the Big Beautiful Bill is similar to some of the language in Trump’s March executive order.