CNBC.COM
Beginning as early as July 2026, several provisions in President Donald Trump's domestic spending and policy bill will change the way students and families pay for higher education.
The so-called 'big beautiful' bill brings new borrowing limits and reduces the number of repayment plan options for federal student loan borrowers taking out loans on and after July 1, 2026. It also eliminates Grad PLUS loans for students seeking advanced degrees after that date.
While not all students take out federal loans to pay for their education, 61% of college students say they will be impacted by the bill, according to a new survey conducted by U.S. News & World Report. The news outlet surveyed nearly 1,200 college students to gauge their understanding and expected impact of the policy changes.
"Honestly, I'm cooked," one student wrote in the survey. "I wanted to go to medical school but now I won't," another said.
The student ditching their med school plan isn't alone — over a third of respondents said they're canceling plans to further their education in response to the policy changes, U.S. News found. Others students said they are considering workarounds like going to school abroad or joining the military to help fund their education.
Who will be impacted by new federal loan policies
Students interested in pursuing graduate or professional degrees are among those most likely to be impacted by the policy changes due to the new borrowing limits and the elimination of Grad PLUS loans.
Currently, graduate and professional students — like those in medical or law school — can borrow a maximum of $138,500 over the course of their studies, including any loans taken out as an undergrad.
Undergraduate loans max out at $57,500 for independent students and $31,000 for dependent students, leaving a grad student who borrowed as much as possible for undergrad with a total loan limit between $81,000 and $107,500.
Under the new legislation, graduate students can borrow up to $100,000 on top of undergrad loans while professional students can take out up to $200,000.
While the new aggregate loan limits are technically higher than the existing borrowing caps, students who need to borrow beyond those amounts have fewer options.
Currently, graduate students can borrow up to their entire cost of attendance with Grad PLUS loans. They come with higher interest rates than direct loans, but still have advantages over private loans, including fixed interest rates and access to income-driven repayment plans.
Help us help you: Take our survey on work, money and life goals
Without Grad PLUS loans, some students may be forced to turn to private lenders if they need to borrow to pay for school.
"The elimination of Grad PLUS loans will make it impossible for a lot of people to go on without having to take out either a private student loan or maybe rely on a parent's help," says Erika Giovanetti, consumer lending analyst at U.S. News. "And even when you're taking out a private student loan, you might have to rely on a parent to cosign."
Parents may want to help their child by cosigning or taking out a loan themselves, but for many families that may not be feasible, especially if the parents are approaching retirement or are still paying back loans for their own education.
A recent Urban Institute analysis of National Center for Education Statistics data found current and recent grad students tend to borrow more than what will be allowed in the future.
The trend is most common among dentistry students, 58% of whom borrowed more than the forthcoming $200,000 aggregate limit as of 2020, Urban Institute found. More than a third of students who borrowed for medical school took out more than the lifetime limit.
Want to stand out, grow your network, and get more job opportunities? Sign up for Smarter by CNBC Make It's new online course, How to Build a Standout Personal Brand: Online, In Person, and At Work. Learn from three expert instructors how to showcase your skills, build a stellar reputation, and create a digital presence that AI can't replicate. Sign up today with coupon code EARLYBIRD for an introductory discount of 30% off the regular course price of $67 (plus tax). Offer valid July 22, 2025, through September 2, 2025.
Plus, sign up for CNBC Make It's newsletter to get tips and tricks for success at work, with money and in life, and request to join our exclusive community on LinkedIn to connect with experts and peers.
