by Washington, D.C. — The U.S. Department of Education announced major changes to federal student loan programs Thursday, following the completion of a negotiated rulemaking session under President Trump’s One Big Beautiful Bill Act (OBBBA). The sweeping reforms eliminate certain loans, cap borrowing limits, and simplify repayment options, marking the most significant federal student loan overhaul in decades.
Key Changes to Student Loans
Under the new rules, the Grad PLUS loan program has been eliminated, and Parent PLUS loans will now face strict borrowing limits. Graduate students will be restricted to $20,500 annually (with a lifetime maximum of $100,000), while professional students can borrow up to $50,000 per year, totaling no more than $200,000 over their studies. Parent PLUS loans will also face new caps to prevent excessive debt accumulation.
The Department of Education also dissolved multiple repayment plans previously created under the Obama and Biden administrations. In their place, a new Repayment Assistance Plan (RAP) will be introduced starting July 2026, simplifying repayment for borrowers nationwide.
Impact on Public Service Loan Forgiveness (PSLF)
In addition to loan caps, the Trump administration revised PSLF eligibility rules, excluding employees of organizations found to have a “substantial illegal purpose”. This includes entities supporting undocumented immigrants, offering gender-affirming care to minors where prohibited, or engaging in terrorism-related activities. Employees of ineligible organizations will no longer qualify for PSLF, though employers can regain status after corrective actions or a decade-long wait.
Payments made by borrowers prior to July 1, 2026, will remain protected, but the changes could affect millions of public service and nonprofit employees. In 2022, roughly 9 million borrowers were potentially eligible for PSLF.
Legal Challenges and Opposition
The reforms have sparked pushback from cities and labor unions. Boston and Chicago, along with major unions, filed a lawsuit arguing the new PSLF restrictions violate Congressional intent and threaten staffing in essential public and nonprofit roles. Critics say the rules will limit loan forgiveness opportunities for millions of Americans working in public service.
Conclusion
More than 42 million Americans carry approximately $1.7 trillion in student loan debt, making these federal policy changes highly significant for families, students, and the workforce. Officials say the new limits aim to prevent unsustainable borrowing and reduce rising tuition costs, while simplifying repayment to ease financial planning for borrowers.
Many students and parents will likely review their loan plans in response to these changes, and the new RAP could shift borrowing patterns for both current and future borrowers.
Do you support stricter borrowing limits and simplified repayment plans, or do these reforms unfairly restrict opportunities for graduate students and public service workers? Share your thoughts in the comments below.
