President Trump’s sweeping new law, signed on July 4, 2025, is more than just fireworks and headlines. His so-called “One Big Beautiful Bill” changes how students pay for college, how schools get funded, and even how programs get judged. It rewrites the rulebook for higher education.
Starting July 2026, the student loan system won’t look like it used to. President Trump’s bill wipes out the Grad PLUS program, which gave unlimited loans to graduate students. That is gone! In its place, students face hard caps.
Grad students can borrow $20,500 a year, up to $100,000 total. Medical and law students may run out of federal loan options before they finish school.
Trump / IG / Per Trump’s “One Big Beautiful Bill,” parents can now borrow only $20,000 a year, capped at $65,000.
Families who used to rely on these loans to cover steep tuition bills will have to find new ways to pay. Private loans might fill the gap, but they come with higher interest and fewer protections.
Student Repayment Will Get Simpler But Tougher
President Trump’s bill cuts down repayment options from a confusing list to just two. The first is a revised standard plan that spreads out payments based on your total debt. The second is called RAP, Repayment Assistance Plan. It offers a low $10 minimum monthly payment and forgives any leftover balance after 30 years. But that is longer than current forgiveness plans, which offer relief after 20 or 25 years.
This “simplification” may help with clarity, but it makes repayment slower for many. Low-income borrowers could pay more over time. And those banking on earlier forgiveness will need to adjust fast.
Grad Schools May Start Cutting Back
With less federal money flowing in, many grad schools will feel the heat. If students can’t borrow enough, programs that cost more than $100,000 may struggle to survive. Colleges may start shrinking or dropping expensive degrees like MBAs or law. Others might drop tuition to stay attractive.
Expect program changes, staff cuts, and new financial strategies. Some universities might shift their focus to cheaper, shorter degrees, or shift attention to undergraduates, where the rules are looser.
Buro / Pexels / Schools now have to prove their graduates earn more than high school grads. For undergrad programs, that means showing grads make real money, NOT just holding a diploma.
Grad programs face similar comparisons. They need to match or beat earnings from bachelor’s holders.
If they fail, they could lose access to federal student aid, a death sentence for many programs. According to early data, over half of the current two-year programs may not make the cut. Schools will be scrambling to track alumni income and clean up low-performing programs.
Plus, elite private universities like Harvard, Stanford, and Yale are getting hit with a bigger endowment tax. It is jumping from 1.4% to 8%. That is hundreds of millions of dollars in new taxes for some of the richest schools in America.
This could change how these schools fund scholarships, research, and student services. Even if they don’t cry poor, the pinch is real. They may pull back on aid packages or scale back expansion plans. For once, even the Ivy League feels a little heat.
The bill slashes $1 trillion from Medicaid and SNAP by 2028. These programs help low-income families and prop up state budgets. When that money disappears, states will have to make tough calls, and higher education is often the first to take the hit.
Maine expects to lose $4.5 billion over ten years. Other states may see similar gaps. That likely means fewer scholarships, less campus funding, and higher in-state tuition. Public colleges could shrink while trying to do more with less.