Important Update: Senate-Passed “One Big Beautiful Bill Act” – Key Higher Education Impacts
Dear School Partners,
The U.S. Senate has passed the “One Big Beautiful Bill Act,” a sweeping legislative package that includes major changes affecting federal student aid programs and institutional accountability. Below is a summary of many of the key provisions relevant to higher education institutions. This list is not comprehensive but a starting point to begin thinking about the upcoming changes.
🎓 Student Loan & Repayment Changes
Graduate PLUS Loans Eliminated: Grad PLUS loans will be discontinued on July 1, 2026. Students with existing Graduate PLUS loans as of June 30, 2026 may continue to receive graduate PLUS loans to the completion of their program of study. (That time to complete is the lesser of 3 years or the difference between the published minimum time for a full-time student to complete the program and the period of study the individual completed.)
- New aggregate borrowing caps will apply beginning July 1, 2026:
- $100,000 for graduate students ($20,500 per academic year)
- $200,000 for professional programs ($50,000 per academic year)
- Graduate-level degree program that prepares students for a specific profession (examples: Doctor Medicine, Juris Doctor, Doctor of Optometry, Doctor of Dental Surgery, etc.)
- New Repayment Plan (RAP):
• Replaces existing income-driven repayment plans by 2028
• Income-based repayment based on adjusted gross income, with a minimum payment of $10 per month.
- Undergraduate Subsidized Loans: 150% Subsidy Limit restored (limits subsidized usage to 150% of program length)
- Eliminates unemployment and economic hardship as reasons for deferment or forbearance effective July 1, 2027
- The law contains a $257,500 borrowing cap on all federal student loans, excluding borrowed Parent PLUS loan amounts.
- The law requires institutions to prorate annual loan amounts in direct proportion to the percentage of full-time the student is enrolled.
💰 Pell Grant Changes
- Pell Grant eligibility extended to shorter-term workforce programs.
- Requires foreign income to be included in the calculations for Pell eligibility and requires the use of the IRS definition of AGI.
- Pell recipients cannot receive the full award if all costs are covered by non-federal aid.
- Additional funding added to address shortfall through FY 2026
🏛️ Institutional Accountability
- Graduate Earnings Accountability: Institutions must meet minimum earnings thresholds for graduates to retain loan eligibility for specific programs.
- Return of Credit Hour Definition: Tightens program eligibility and delivery models.
🏫 Endowment Tax Expansion
- Institutions that serve less than 3,000 students are exempt from the proposed endowment tax.
- Private institutions with 3,000+ students with endowments:
• $500K/student: 1.4% tax
• $750K–$2M/student: 4% tax
• Over $2M/student: 8% tax
If you have questions about how these changes may impact your institution or your students, please don’t hesitate to reach out.
Sincerely,
Bridget McGuire
Chief Operating Officer