Federal student aid recipients are preparing for impending financial challenges following the July 4 passage of the One Big Beautiful Bill Act.
The act includes provisions eliminating Grad PLUS loans, several repayment plans and deferment and forbearance options. It also implements caps for some borrowers.
A chart from the National Association of Student Financial Aid Administrators shows the changes to federal student aid contained within the bill, as well as proposed measures that were not included in the final version.
Many of the bill's federal student aid policies enter effect on July 1, 2026, while others are enacted at a later date.
What's in the bill
Grad PLUS loans, which are used by graduate and professional students, will no longer be offered after that date. Those already enrolled in the loans can continue to borrow for three more academic years or until their expected program completion — whichever is less.
In their place, these students may take out loans with new borrowing caps. Professional students, those pursuing degrees in fields like law and medicine, may borrow $50,000 per year and $200,000 over their lifetime. Non-professional graduate students may borrow $20,500 per year and $100,000 over their lifetime.
Caps were also placed on Parent PLUS loans, which are used by undergraduate students. Parents can now take out up to $20,000 annually per dependent child and $65,000 over that child's lifetime.
The number of student loan repayment plans also shrank under the bill. Popular options, such as the Saving on a Valuable Education, Pay As You Earn and Income-Contingent Repayment plans, will be phased out.
Affected borrowers must switch by July 2028 to the current Income-Based Repayment Plan, the new standard repayment plan or the new Repayment Assistance Plan. By next July, new borrowers will then no longer have access to IBRs.
Loan deferment for economic hardship or unemployment will also go away, although those with loans made before July 1, 2027, will still be able to access those options.
Students whose Student Aid Index is double the maximum Pell Grant award or who receive non-federal aid covering the cost of attendance will be ineligible for a Pell Grant.
What's at stake
Ives Machiz, a clinical assistant professor of finance at ASU, said the act's changes will be especially difficult for low-income loan holders.
Because RAP payments are based on the borrower's adjusted gross income, many loan holders may pay more monthly. Machiz said some may ultimately pay less based on interest calculations, and borrowers who recertify their income could remain on their current plan for longer.
Machiz said the lack of flexibility and discontinuation of deferment options will reduce the tools students have to get through periods of hardship.
In a written statement, Arizona Democratic Sen. Ruben Gallego said the bill "is a cruel joke for Arizonans."
"For first‑generation, working‑class students, especially here in Arizona, this bill isn't just harmful—it's a barrier to opportunity," Gallego said in the statement.
Impact on ASU
A University spokesperson said in a written statement dated Aug. 26 that ASU is examining the bill.
"ASU has taken a new approach to higher education and is proud to have created a new kind of American university where you students need not choose between access and excellence," the spokesperson said in the written statement.
Yet Machiz and students voiced concerns that these are the kinds of choices that federal student aid recipients will have to make, even at ASU.
Machiz said the changes may cause students to evaluate their future finances more when making decisions about enrollment, academic programs and graduate school. Although he said ASU is a "relatively affordable university," he added that financial challenges may still have an impact.
Justine Hecht, a doctoral student in justice studies, is a member of the Debt Collective — a national organization advocating for the abolition of student loan debt.
Hecht said they are enrolled in the SAVE plan. While they are currently on a forbearance that allows them to not make monthly payments, their current payments would be about $300 a month.
When the One Big Beautiful Bill Act provisions take effect, Hecht's payments will increase to between $400 and $600 a month.
Because that increase is not manageable for Hecht, they are taking more courses this semester to qualify for loan deferment. However, they said the addition of these courses will add $10,000 to their student loan balance.
Hecht called the federal government's changes to the terms of their existing loans an "injustice."
"The federal government can change its end of the bargain whenever it wants to, but student loan borrowers have no recourse, essentially," Hecht said.
Edited by Kasturi Tale, George Headley, Kat Michalak and Pippa Fung.
Reach the reporter at coyer1@asu.edu and follow @carstenoyer on X.
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Carsten Oyer is a sophomore studying journalism and mass communication, as well as public service and public policy. This is his second semester with The State Press, having previously worked as a politics reporter.
