How Trump’s ‘One Big Beautiful Bill’ Could Make the Student Loans Situation Worse

Student loans are about to change, and not in a way many borrowers will like. Trump’s proposed “Big Beautiful Bill” takes a blowtorch to current policies, rewriting the rules on how Americans borrow, repay, and survive the cost of college.

Let’s break down what this could mean for your bank account and your future.:

New Borrowing Caps Could Leave Students Short

Student loans are now capped under this bill, and the numbers fall short of real-world costs. Graduate students would hit a hard ceiling at $100,000 for all loans. For law and medical students, the cap is $200,000. Parents using Parent PLUS loans get just $65,000 per child.

 

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Those numbers may sound big until you check the price tags. Medical school alone can run up to $390,000, and law school is not much cheaper either. These new limits mean many students will have to look for private loans, which come with higher interest rates and none of the federal perks like forgiveness or flexible repayment.

This also affects who gets to go to grad school. Students without wealthy families or high-paying jobs might be shut out or buried in expensive private debt.

Freepik / Starting in July 2026, new student loan borrowers will only have two options to pay back what they owe: A fixed-rate plan from 10 to 25 years. Or, a Repayment Assistance Plan (RAP) that links payments to your income.

Sounds simple, right? But here is the catch: RAP isn’t generous. It charges 1 to 10 percent of your discretionary income, but with fewer breaks than the current SAVE plan. Many borrowers could end up paying $3,000 to $3,500 more every year under RAP.

And the forgiveness timeline gets worse, too. Under SAVE, some debts were cleared in 20–25 years. With RAP, you are stuck for 30 years before the rest is wiped out. That is a whole decade longer carrying student loans on your back.

Older Plans Get Phased Out

Current borrowers don’t escape the changes. The SAVE plan, which helped millions lower their monthly payments, is getting phased out. If you are already on SAVE, it lasts until July 2028. After that, you are switching to RAP or the fixed-rate plan.

Graduate PLUS loans also disappear. These used to cover full tuition for advanced degrees. Without them, schools may have to lower costs, or students may just walk away from grad school altogether. If you are relying on generous repayment perks or unlimited borrowing now, the clock is ticking.

Freepik / One of the most brutal cuts of the bill is fewer protections when life hits hard. Economic hardship deferments and unemployment pauses are gone for new loans after July 2025.

Tennessee and Similar StatesWill Feel the Heat

Over 890,000 people in Tennessee hold student loans, with an average balance of $37,120. These new rules could hit them hard. The RAP plan, while simpler, is more expensive for most. SAVE’s interest protection ends next year, which means balances will start growing again.

For some, that means an extra $300 per month in interest alone. Many borrowers will be forced to switch plans in 2028, possibly raising their monthly bills. If you are trying to plan your finances, it just got a lot trickier. That means if you lose your job, you still owe every month.

Forbearance is also capped. You only get 9 months in a 24-month window. After that, you are on your own. These limits could push more borrowers into default, especially during recessions or health emergencies.

Student loans used to have some built-in shock absorbers. This bill pulls a lot of those out.