One Big Beautiful Bill Act
One Big Beautiful Bill Act
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law through the budget reconciliation process resulting in changes to federal student aid programs. Some of these changes went into effect immediately, while others will go into effect in the near future and beyond.
Graduate PLUS loans: The Law eliminates the Graduate PLUS program, effective July 1, 2026, with legacy provisions for current borrowers to complete their program of study.
Loan limits: The OBBBA designates a student enrolled in a J.D. degree program as a professional student and caps the annual loan limit at $50,000. The aggregate limit for professional students is $200,000.
Lifetime borrowing cap on all federal loans: The law contains a $257,500* borrowing cap on all federal student loans, excluding borrowed Parent PLUS loan amounts.
Loans
Graduate PLUS loans: The Law eliminates the Graduate PLUS program, effective July 1, 2026, with legacy provisions for current borrowers to complete their program of study.
Loan limits: The OBBBA designates a student enrolled in a J.D. degree program as a professional student and caps the annual loan limit at $50,000. The aggregate limit for professional students is $200,000.
Lifetime borrowing cap on all federal loans: The law contains a $257,500* borrowing cap on all federal student loans, excluding borrowed Parent PLUS loan amounts.
Annual, aggregate, and lifetime loan limits effective date: Loan limits become effective on July 1, 2026, with a legacy provision included for current borrowers to borrow under current limits for the remainder of their expected time to credential.
Institutionally determined loan limits: The law includes a provision allowing institutions to impose their own program-level loan limits and becomes effective on July 1, 2026.
Loan proration for less-than-full-time enrollment: The law requires institutions to prorate annual loan amounts in direct proportion to the percentage of full-time the student is enrolled.
*Incl. undergraduate cap of $57,500
Repayment
Repayment Plan options for New Loans: Borrowers with new loans made on or after July 1, 2026, can be repaid using only two plans: a new standard repayment plan with fixed monthly payments and fixed terms ranging from 10 to 25 years based on the amount borrowed and the new income-based repayment plan, RAP.
Repayment Plan options for Current Loans: Borrowers with no new loans made on or after July 1, 2026, can continue to be eligible to enroll in the current Standard, current Income Based (IBR), Graduated, and Extended repayment plans, and could also opt in to the new RAP. Current borrowers enrolled in ICR, PAYE, or SAVE plans must transition to a new repayment plan by July 1, 2028. If no selection is made by that date, they will be moved into RAP.
Repayment Assistance Plan (RAP): Subsidized/Unsubsidized, Graduate PLUS and Consolidation Loans are eligible. Income basis for monthly payment is based on a percentage of Federal Adjusted Gross Income (AGI), on file with the IRS.
Borrowers who either don’t have an Adjusted Gross Income (AGI) or whose AGI doesn’t reasonably reflect the borrower’s current income are required to provide the Department of Education (ED) with documentation to calculate their monthly payments.
Repayment Assistance Plan monthly payments calculation: The monthly payment calculation is on a sliding scale ranging from 1% -10% for AGI’s greater than $10,000, with increases of 1% for each increment of $10,000 in AGI. For AGI’s $10,000 or less, the monthly payment is $10.00. For each dependent, the borrower’s monthly payment is reduced by $50.00, except that the payment can be no less than $10.00. Income and dependents are calculated separately for married borrowers who filed taxes separately from their spouses.
Maximum repayment period is 360 months (30 yrs). Any remaining outstanding balance of principal and interest is forgiven.
Income Based Repayment (IBR) plan changes: An earlier version of the bill proposed to remove the cap on monthly payments made under the IBR plan to no more than the borrower would have paid under the Standard 10-year repayment plan, while the law retains the cap. The law also removes the requirement for borrowers to demonstrate a partial financial hardship to enroll in IBR. Additionally, the law retains forgiveness for balances of loans repaid under IBR at 25 years.
Economic Hardship Deferment and Unemployment Deferment: The law eliminates the Economic Hardship Deferment and Unemployment Deferment for loans made after July 1, 2027.
Public Service Loan Forgiveness (PSLF): If you are employed by a government or non-profit organization, you may be eligible for PSLF.
You can find further information about how these changes affect law students and more at AccessLex.org and at the Federal Student Aid website.