U.S. Student Loan Reform Takes Effect Under New OBBBA Law

On July 4, 2025 the One Big Beautiful Bill Act (OBBBA) was signed into law, overhauling federal student aid. The law phases out new Grad PLUS loans, caps Parent PLUS loans at $20,000 per year and $65,000 lifetime per student, and sets new aggregate borrowing limits – $100,000 for graduate degrees, $200,000 for professional degrees, and a $257,500 combined lifetime limit across all federal loan programs.

Income‑driven repayment plans such as SAVE, PAYE and ICR are being discontinued. New borrowers must choose either a Tiered Standard repayment plan with fixed monthly payments, or the newly created Repayment Assistance Plan (RAP). Commentators note the reforms aim to curb soaring tuition and curb debt growth, while critics argue the changes may strain borrowers who rely on flexible repayment options.

The policy shift is expected to affect millions of current and prospective college students across the United States, reshaping how higher‑education financing is accessed and repaid.