How the One Big Beautiful Bill of America Impacts Student Loan Policies and Education Funding
Under President Trump’s One Big Beautiful Bill of America (OBBBA) legislation, signed into law in July, changes in student loans, education funding, and new savings accounts will impact individuals and families across the United States.
The impact will be far-reaching, so educating consumers is essential in order that they can be prepared and stay informed about new financial opportunities or limitations.
Student loan borrowing limits are tighter under the Trump Administration. Families should begin planning for higher education funding in the near term. Utilizing cash flows, private funding, or tax-advantaged savings plans can help families bridge the funding gap.
The OBBBA implemented new annual and aggregate limits for graduate and professional school loans. Graduate student loans will be capped at $20,500 annually and $100,000 in total. Professional student loans will be capped at $50,000 annually and $200,000 in total.
Starting for new loans disbursed on or after July 1, 2026, parents will be limited to borrowing $20,000 per academic year per student under Parent PLUS. The aggregate (lifetime) cap for Parent PLUS will be $65,000 per dependent undergraduate student. Before this change, Parent PLUS loans typically allowed parents to borrow up to the cost of attendance minus other aid for their child, with no fixed annual or lifetime cap.
The changes at the federal level could greatly affect higher education attendance decisions students and families will make, due to decreases in the annual and aggregate loan cap and the elimination of various loan programs.
However, the 529 plan is a tax-advantaged investment account for education savings, and the OBBBA is expanding the criteria for what it can be used for. Qualified expenses within a 529 plan are now expanded to include the following: costs for postsecondary credentials, exam fees, continuing education, and related training programs, educational therapies for students with disabilities, tutoring, curriculum materials, and standardized test fees for K–12 students.
The K-12 annual limit withdrawal for a 529 plan was previously up to $10,000 per year for tuition (for K-12 public/private), and the OBBBA increases the cap to $20,000 starting in 2026.
Navigating such significant financial policy changes can be intimidating, but the OBBBA also provides opportunities for families across the United States.