On July 4, 2025, President Donald Trump signed H.R.1 – the One Big Beautiful Bill Act (OBBBA) into law. This sweeping legislation touches nearly every aspect of federal policy, including tax reform, social programs, immigration, defense, and notably, higher education.

While some controversial proposals—like cuts to the Pell Grant program and a 21% endowment tax—were ultimately excluded or significantly reduced, the final bill introduces significant changes for students, families, and institutions.

Student Loans & Repayment

  • Subsidized Loans: Undergraduate access to subsidized federal loans remains unchanged.
  • Grad PLUS Loans: Eliminated starting July 1, 2026.
  • Parent PLUS Loans: Now capped at $20,000 per year, with a lifetime limit of $65,000 per student.
  • Graduate & Professional Loans:
    • Graduate: $20,500/year, $100,000 lifetime cap
    • Professional: $50,000/year, $200,000 lifetime cap
  • Repayment Plans:
    • Standard Plan: Fixed payments over 10–25 years
    • New Income-Driven Repayment Assistance Plan
    • Note: Current borrowers are not required to switch to the new plans.

Pell Grant Updates

  • Expanded Eligibility: Now available for students in accredited short-term job-training programs.
  • Full-Time Status: Maintains the definition at 24 credit hours per year (not the proposed 30).
  • Less-Than-Half-Time Students: Still eligible.
  • New Restriction: Students whose scholarships or grants cover full cost of attendance are no longer eligible for Pell Grants.
  • Funding Gap Closed: The bill ensures full funding for the Pell program.

Institutional Accountability

  • Institutions must now demonstrate that graduates earn more than the median high school graduate.
  • This earnings-based accountability aims to ensure return on investment for students and taxpayers.

529 Educations Plans

529 plans can now cover workforce credentials and continuing education, not just traditional college tuition.

Impacts of Changes in Other Areas

With nearly $1 trillion in cuts to Medicaid, the legislation threatens essential health services that many students—particularly those in rural and low-income communities—rely on for mental health support, screenings, and chronic care management. These reductions could strain state budgets, forcing difficult trade-offs that may include cuts to public university funding. As institutions brace for increased financial pressure, the ripple effects may include fewer student support services, diminished research capacity, and a narrowing of educational opportunity—especially for those who depend on public programs to access and succeed in higher education.

For additional information on how the bill impacts healthcare, nonprofits and other industries, click here.

If you have questions about how these potential changes could impact you and your business, please contact your Dean Dorton advisor.