Key Points 

• Congress passed the One Big Beautiful Bill Act (OBBB), which makes numerous changes to the federal student loan program, saving $307 billion. 
• Graduate students and parents of undergraduates will be subject to new caps on federal lending. Loan limits for undergraduate students remain unchanged. 
• The bill creates a new income-driven student loan repayment plan that will prevent borrowers’ balances from rising over time and ensure that most borrowers pay down their loans quickly. 
• Colleges and universities are held accountable for poor student outcomes; degree programs where graduates’ earnings are too low will lose access to federal funding.

Introduction

At the beginning of July, President Donald Trump signed into law the One Big Beautiful Bill Act (OBBB), a comprehensive package of reforms to taxes and government spending.¹ While the package touches on myriad policy areas, it includes a comprehensive set of reforms to the federal student loan program. These represent some of the most consequential changes to federal higher education policy in years.

Taken together, the changes to student loans will save taxpayers $307 billion over a decade, according to preliminary estimates from the Congressional Budget Office (CBO).² But as this report’s analysis shows, the changes could also rein in the growth of tuition, prevent excessive interest accumulation on student debts, and hold colleges accountable for poor student outcomes. 

The bill pursues these goals through three principal mechanisms. First, it sets limits on how much students may borrow from the federal government. Second, it overhauls student loan repayment to reverse some of the repayment system’s costliest aspects and ensure borrowers can pay down their debts. Finally, it creates a new accountability framework to deny student loans to colleges with poor outcomes. This report analyzes each of the three policies in turn. 

Read the entire report here.