Trump-Backed Bill Overhauls Federal Student Loans, Caps Parent PLUS, Raises Repayment Thresholds

President Donald Trump's 'One Big Beautiful Bill' (OBBB) has introduced significant changes to federal student loans and repayment options, set to take effect starting July 1, 2026. The bill imposes caps on federal borrowing, including a $20,000 annual and $65,000 lifetime cap on Parent PLUS loans, and eliminates the Graduate PLUS loan program, reducing options for graduate students. It also overhauls repayment plans by replacing existing income-driven repayment options with a new Repayment Assistance Plan (RAP), which mandates a minimum payment of $10 per month for all borrowers and bases payments on income minus allowances for dependents. Alongside these reforms, the bill calls for further Medicaid and regulatory cuts to address fiscal challenges and extend conservative policy goals. Experts warn these changes will make college more expensive for many families, with reduced safety nets for borrowers facing financial hardship and increased taxes on school endowments likely leading to higher tuition or reduced financial aid. Meanwhile, interest rates for student loans in the UK are set at 3.2% Retail Price Index for the 2025-2026 period, with repayment thresholds scheduled to rise, highlighting ongoing global concerns over student loan affordability.