Student Loans And The "One Big Beautiful Bill"—Here’s What It Means for You
How this new bill will affect your student loans
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📝 Main topic: The new bill and your student loans
On July 4, 2025, President Trump signed the “One Big Beautiful Bill” into law, and changes regarding student loans are slowly being implemented. Borrowers can expect new loan agreements within the coming year.
If you're concerned about these changes, we'll go over how the bill affects current plans, new plan options, important dates, and how you should be planning your loan repayments in the future.
Review of the current loan repayment options
Currently, borrowers have two main repayment options: fixed-rate repayments or income-driven plans. Under a fixed-rate repayment plan, monthly payments are a predetermined amount based on how much you owe, the interest rate, and a fixed repayment period. The following plans are considered fixed-rate plans:
Graduated
Extended
Standard
The second type consists of income-driven plans, which take into account how much you earn and your family size to determine the amount of monthly repayments. These plans include:
Income-Based Repayment (IBR) Plan
Income-Contingent Repayment (ICR) Plan
Pay As You Earn (PAYE) Repayment Plan
Saving on a Valuable Education (SAVE) Plan
New bill and new repayment options
Most of the previously mentioned repayment plans will be eliminated by July 1st, 2026, and others will be slowly phased out by July 1, 2028. Current and new borrowers will have the following repayment options to choose from.
Option 1: Standard Plan
The standard plan offers a fixed monthly payment that will continue based on the length of the loan. Larger loans get more time, but the standard time is 10-25 years.
Here is the criteria based on the amount borrowed:
A 10-year repayment plan if you owe less than $25,000
Repayment expands to 15 years if you owe $25,000 or more but less than $50,000.
Repay over 20 years if you owe $50,000 or more but less than $100,000
Repay over 25 years if you owe $100,000 or more
Option 2: Repayment Assistance Plan (RAP)
The Repayment Assistance Plan, or RAP, is meant to replace some of the current income-based plans. However, unlike plans such as SAVE and PAYE that take into consideration discretionary income to determine the repayment amount, RAP will instead consider your annual gross income. Some of the terms of this new plan include:
Minimum $10 monthly payments for borrowers earning $100,000 or less.
Repayment time is up to 30 years, after which loans can be canceled.
Payment amounts are capped at 10% for borrowers earning more than $100,000 annually.
Option 3: Amended Income-Based Repayment (IBR)
An amended version of the IBR will continue under the One Big Beautiful Bill. If you are on PAYE, SAVE, or ICYE, you can move to an amended IBR plan before July 1, 2028. This version will not be available to new borrowers who borrow money after July 1, 2026.
Changes to the IBR include:
Eliminating the partial financial hardship requirement starting July 4, 2025, which means you can enroll regardless of your income.
If you took out a loan before July 1, 2014, and have an old IBR, your repayment rate will be 15% of your discretionary income, and the loan can be forgiven after 25 years.
If your loan was taken out between July 1, 2014, and June 30, 2026, you will pay 10% of your discretionary income, and your loan can be forgiven after 20 years.
Graduate school changes
Graduate student borrowers will also face changes. The former system, the Grad PLUS program, allowed students to borrow as much as the total cost of attendance, minus the cost of other financial aid.
However, starting July 1, 2026, a $20,500 per year borrowing limit will be put in place for grad students. A lifetime loan limit of $100,000 will also be established. Previously, the lifetime borrowing cap for graduate students was $138,500. For all federal student loans (including both undergraduate and graduate loans), there is a new lifetime borrowing limit of $257,500 per person.
For professional graduate degrees, such as those in medicine or law, borrowers will see their annual borrowing limit set at $50,000, and their total lifetime borrowing cap will be increased to $200,000.
Pell Grant updates
Pell Grants have also been addressed in the One Big Beautiful Bill. This grant, which offers help to low-income students, will also cover job training programs. The bill will also cover the costs of the grants shortfall of about $10 billion in 2026.
Students who receive a full-ride scholarship will not be eligible for the grant.
Important dates
If you are a current borrower under a fixed-rate plan, you have until July 1, 2026, to decide if you want to move to the new standard plan or RAP.
If you have an income-based plan, you have until July 1, 2028, to decide which plan you want to move to. An exception is for those currently enrolled in PAYE, SAVE, or ICYE: you can move to the amended IBR plan.
If you borrow after July 1, 2026, you will choose between a standard plan or RAP.
You can also use student loan calculators to help determine which plan is best for you.
Remember, if you do not act before these dates, your loan will automatically be moved to one of the new plans.
How to manage your student loans under this new bill
With loan changes on the way, now is the time to start planning.
If you're currently paying off student loans, you have some time before the new regulations take full effect. You can use this time to pay down your debt and prepare for the changes.
Here's a breakdown of what you can do:
1. Understand what you owe
The first and most important step is to fully understand your debt. While it isn’t pleasant to review your total loan amount, knowing the exact figure is the foundation for any repayment strategy. Let’s break down the process.
Log in to your accounts. Access your loan servicer's online portal to see your current balance, payment history, and interest rates. Make sure all your payments are up to date.
Identify all your loans. If you borrowed from more than one agency, make sure you've accounted for every single loan agreement. You can access federal loan information through the Federal Student Aid website. For private loans, you'll need to contact each lender or check your credit report.
Know your current plan. Take a moment to review your current repayment plan (e.g., Standard, Graduated, or an Income-Driven Plan). Knowing your current plan will help you decide which of the new loan repayment options you should move to.
2. Reviewing new repayment options
A majority of borrowers will need to switch to either the Standard Plan or the Repayment Assistance Plan (RAP). Here’s what to consider before choosing a new plan.
Assess your current budget. Compare your current monthly payment with your budget. Are you able to comfortably make payments are you cutting it close? Adjust your expenses and spending so you can make monthly payments without interruptions.
Take into account your income and lifestyle. Ask yourself which new repayment option best fits your income and lifestyle.
Plan for the future. Consider your current and future needs and goals before choosing a plan. Think about any potential changes in income or new expenses in the next year or two that might affect your ability to make payments.
Consider lifestyle changes. Take into account any lifestyle changes that may affect your ability to make payments under the new plans.
3. Try reducing expenses
If possible, consider cutting back on certain expenses to put more money toward your loans. Some ways to cut expenses include:
Cooking at home instead of eating out
Using public transportation to get to work if it's cheaper than driving
Switching phone plans or insurance to save more
Reviewing your non-essential expenses in detail for opportunities to cut back
Put any money you save toward your loans. Whether you can make a large payment or a small one, every effort makes a difference.
4. Start a side hustle to help pay off your loans
If you do not have a lot of wiggle room in your budget, consider starting a side hustle to generate funds to put toward your loan. Some ways to bring in extra money include:
Selling old items like textbooks, electronics, clothing and household/kids items
Working as a delivery driver or ride-share driver
Freelancing, content creation, or virtual assisting
Selling crafts
Renting out a room in your home
5. Consider the career impact on loan repayment
If your employer is helping you repay your loans, make sure you understand how the new loan changes will affect your status. For instance, the Public Service Loan Forgiveness (PSLF) program will now require enrollment in the new income-based plan. Make sure your employment and repayment path align with the new requirements.
7 Action steps for new borrowers
If you know you’ll need to borrow money for your future college endeavors, here is how you can prepare.
1. Start saving early
The best way to pay for college is to start saving as soon as possible. While the full cost of tuition may seem overwhelming, it's more manageable to focus on saving for small, specific expenses. Instead of aiming to save a large amount like $3,000 for tuition, try focusing on a smaller goal like saving $500 for books.
To get started, create a list of your expected college expenses and choose one that you can realistically save for. That cost will become your savings goal. To reach your goal, you can:
Try savings challenges. Look for popular challenges like the "52-week challenge" or the "100 envelope challenge" to make saving fun and consistent.
Increase your income. Ask for a raise at work, start a side hustle, or explore opportunities for passive income to boost your savings.
Save consistently in an interest-bearing account. Open a high-yield savings account or a similar account to earn interest on your money.
2. Compare college prices
We know you may have your heart set on an out-of-state school or your parents' alma mater. However, sometimes your dream school doesn't come at a practical price. Consider looking at various colleges and comparing tuition. You might find that studying at a different school can not only help you get a degree and won't leave you with a mountain of debt.
Attending a community college, while not as glamorous, can be a great cost-saving decision. Plus, attending a two-year college before transferring to a four-year university gives you time to decide on what you really want to study.
When comparing colleges, consider the following:
Net price: This is the cost after financial aid, scholarships, and grants are applied.
Types of aid: Look at the different types of financial aid schools offer, such as grants, scholarships, and work-study programs.
Graduation and job placement rates: Research a school's graduation rate and find out what percentage of graduates secure jobs in their field of study.
Career support: Look into the career support and opportunities a school offers its students, such as internships, career counseling, and job fairs.
3. Borrow only what you need
Loans can often feel like you’re getting free money. Receiving ten thousand dollars that you don’t have to pay back right away can feel like you won the lottery. However, loans will eventually be collected, so the best thing to do is to borrow only what you need. By putting together a budget, you can break down your expenses and only take out what is necessary.
Here are some expenses to include in your budget:
Cost of tuition
Room and board
Books and school supplies
Groceries and/or food
Cell phone bills
Trips back home
Car payments and gas
Once you understand the full cost of college beyond the initial tuition, you can borrow within your means.
4. Research scholarships, grants, and assistantships
While loans are not free money for college, grants and scholarships are. They are funds you don't have to pay back and can use specifically for college expenses.
Look into the following resources to see what’s available to you.
Federal Student Aid
Begin by completing the Free Application for Federal Student Aid (FAFSA) to explore federal student aid options and determine your eligibility for financial assistance.
Once you understand your options, you can choose whether to accept the aid offered. This typically includes various possibilities such as loans, work-study programs, scholarships, and grants. Make sure you are clear on the terms before accepting support.
Assistantships
Graduate assistantships are academic employment opportunities awarded to graduate students who demonstrate academic excellence and receive a faculty referral. Although not an option for undergraduates, it’s something to consider if you want to attend graduate school. Focusing on getting good grades and building relationships with professors can set you up for an assistantship in the future.
5. Compare loan options with your earnings
If you need to take out a loan for college, consider how your current and future employment will affect your ability to repay it.
Take a look at your current income to see if your salary would cover the cost of a monthly loan payment. Ideally, you want to keep your payments at around 10% of your monthly income.
Additionally, consider your future income. Does your chosen career path provide the economic opportunity to repay your loans consistently?
6. Build an emergency fund for additional costs
With new borrowing limits and program changes, there is a chance that relying solely on a student loan won't cover all of your costs. Creating an emergency fund to cover miscellaneous costs can prevent you from relying on credit cards and accumulating more debt.
7. Stay organized
Taking on a loan is a financial responsibility. Keeping track of important dates will help you avoid any misunderstandings that can lead to extra fees. Not to mention, technical errors can often occur. Make sure you are keeping track of the following:
Current income
How much you borrow
How much you receive in scholarships or grants
Important deadlines
Payments you have made
Having a clear understanding of your college finances will help prevent any financial stress.
Managing your student loans well is possible!
Student loan debt can be a headache, but it doesn’t have to interrupt your life. Keeping up with your payments, staying organized, and paying attention to any changes will help you to pay down your debt and eventually be debt-free.
If you’re looking for more help in paying off student loans, check out our completely free course on mastering your student loans.
🥰 Team CGF’s Amazon Favs: Save More Money
Looking for more ways to save money to pay off those pesky student loans? Here are some of our favorite tools to help you save money.
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100 Envelopes Money Saving Binder
Could $5,000 help you pay for college? There’s a good chance it will. And by following the 52-week savings challenge using this 100 envelope savings challenge binder, you can save a little over $5,000.
This colorful binder makes saving money fun and easy. With clear money pockets to put your cash and stickers for added organizations, you can stay motivated as you reach your savings goals.
Mr. Pen: Money Envelopes, 100 Pack
Worried about saving money in your savings account because you might end up spending it? Maybe you need a more visual or tactile reminder to help you save? What you need are these handy envelopes. A simple way to save and store cash that you’re saving.
With this 100-pack of envelopes, you can do the 100-envelope challenge. You can also label each envelope with a different savings goal. For instance, one label can be for textbooks, and another label can be for a new car.
Use these envelopes that come in different colors to help you save for your future.
100k Savings Challenge Book: The Ultimate Guide to Save $100,000 with Fun and Easy Tracking
Can you imagine saving $100,000? You could easily pay for a semester or two of college. Your textbooks would be covered, and paying for gas to and from school would not be a problem. Having a hundred thousand dollars saved would probably be enough to pay for your expenses as well as treat yourself to something nice.
As glamorous as this all sounds, you’re probably thinking that you don’t earn that much. How on earth could you save that much?
Fortunately for you, this Savings Challenges Book breaks down everything you need to do to save $100,000. With its unique structure and goal tracking, you’ll be able to easily save money regardless of your income.
Cash Stash Activity Book: 75 Fun Money Savings Challenges from $50 to $10,000
Sometimes we need to gamify our goals, and saving money is no different. The Cash Stash Activity Book will give you fun strategies and games to help you save money. With a fun quiz, you can discover which type of saver you are: a Dreamer, a Perfectionist, an Adventurer, or a Sharpshooter. This insight will help you find the perfect activities to kickstart your savings journey.
This isn't your average budget book—it's a personalized savings adventure. Choose from a variety of challenges tailored to different goals and amounts.
Small wins. Tackle activities that save you $50–$500.
Big steps. Aim for larger savings with $500–$2,500 challenges.
Massive goals. Take on projects that help you save $2,500+.
The 100 Envelope Challenge and other themed challenges for things like holiday gifts or car maintenance.
Each activity provides space to define your savings goal and set a realistic deadline, putting you in complete control.
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