On July 4, the One Big Beautiful Bill Act, also known as H.R.1, a sweeping spending and tax bill championed by President Donald Trump, was signed into law. In its nearly 1,000 pages, the bill includes major tax cuts, reductions to Medicaid and the Supplemental Nutrition Assistance Program, an increase in border and defense spending, several changes to student loan policy and more. Adjustments made to student loan programs is of particular relevance to the University of Michigan community. These changes include an expansion of Pell Grant eligibility, modifications to repayment plans and new borrowing limits on student loans. The Michigan Daily spoke with U-M community members to hear their views on how H.R.1 impacts student loans.
H.R.1 expanded eligibility for Pell Grants, which are intended for students from low-income households, to include students attending shorter-term certificate programs, such as trade schools. This change was originally introduced by the Committee on Education & Workforce in 2023 as the Bipartisan Workforce Pell Act. In an interview with The Daily, Jeremy Wright-Kim, Education assistant professor who works in the Center for the Study of Higher and Postsecondary Education, said the change could provide new opportunities for students while also benefitting labor markets.
“These shorter-term certificate programs are good if your local labor market needs to fill that need,” Wright-Kim said. “There are also students who are more likely to be attracted to those programs, like working adults who maybe can’t attend a full-time, longer-term credential program.”
H.R.1 also reduced the number of loan repayment plans available for new borrowers from seven to two starting July 1, 2026. The new plans include a standard repayment plan with fixed monthly payments and a repayment assistance plan with income-based monthly payments and a minimum payment of $10 a month. An existing income-based repayment plan will still be available to borrowers who take out their loans before July 1, 2026. All other existing plans will be phased out by July 1, 2028, requiring borrowers to switch or be reassigned.
In an interview with The Daily, Michigan Law alum Ryan Jansen said he believes cutting down on plans to be logical.
“The new repayment plans, compared to some of the changes, aren’t as bad as they may seem at first glance,” Jansen said. “I don’t think the idea of trying to consolidate plans is inherently bad.”
Jansen said his main issue with these changes is his struggle to find clear guidance on them, especially with the recent layoffs at the Department of Education.
“I haven’t had any information from the Department of Education, from FAFSA or from my third-party loan servicer, explaining these changes and what I may or may not need to do as somebody who is tentatively enrolled in one plan,” Jansen said. “It’s really hard to get information because this law happened at the same time as a huge downside at the Department of Education. There are less people working and more people trying to get information.”
The University’s financial aid website states it will provide more information on the changes when given more guidance from the Department of Education.
“The recently signed U.S. budget reconciliation bill, H.R.1, impacts federal student loans in many different ways,” the website reads. “Detailed information, including how the changes will be enacted, has not yet been released. The Office of Financial Aid is actively reviewing all information about the new rules and waiting for additional U.S. Department of Education guidance.”
H.R.1 also includes caps on student and parent loans. Starting July 1, 2026, borrowers will have a lifetime borrowing limit of $257,500 for all federal student loans. In addition, loans for graduate students will be capped at $20,500 a year, and loans for professional degrees, such as degrees for doctors and lawyers, will be capped at $50,000 a year. Parent PLUS loans, which allow parents to take loans out for their children, will be capped at $20,000 per year per student with a lifetime limit of $65,000.
In an interview with The Daily, LSA rising junior Alex Braun, Officer-at-Large of College Democrats at the University of Michigan, said he is concerned these caps will make it more difficult for lower-income students to become doctors and lawyers, which is especially troubling due to a doctor shortage in the U.S.
“It sounds like it’s going to be harder to get the funds, harder to repay the loans and, as a result, harder to access higher education institutions, especially for those professional studies, like doctors and lawyers,” Braun said. “We already have a shortage of doctors in the U.S., and I think these changes are going to make it worse and create more barriers to those higher educations.”
Jansen said these caps are too low for students planning to attend the U-M Law School based on its tuition cost.
“The cost of attendance at Michigan Law School is over $106,000,” Jansen said. “Michigan Law is really good at giving merit scholarships, but odds are, you might still be on the hook for more than $50,000. (H.R.1) also added a lifetime cap. So if you took out money in undergrad, you’re going to maybe hit that lifetime cap much sooner. I don’t think $50,000 a year makes law school accessible for most people.”
Supporters of borrowing caps have presented them as a way of encouraging universities to lower their tuition cost. Wright-Kim said this cost reduction is unlikely to occur.
“It’s very hard for institutions to lower their tuition rates because education is an expensive enterprise, and so I think we would be more likely see different groups of students not being able to attend as opposed to colleges saying, ‘Okay, well, the federal government is now giving you students access to fewer resources, and so we’re going to make it cheaper for you,’” Wright-Kim said.
Braum said he feels disappointed to see the federal government failing to support higher education.
“I’m so used to being in a community where everyone supports and encourages higher education,” Braun said. “So to see the opposite direction, to see a divestment in higher education from the federal government, is alarming and a little shocking to me.”
Summer News Editor Alyssa Tisch can be reached at tischaa@umich.edu.