Understanding the Big Beautiful Bill

Timeline

2025

  • July 4: President Trump signs the One Big Beautiful Bill Act (OBBBA) into law. Provisions related to some income-based repayment plans become effective immediately.
  • July 18: The U.S. Department of Education announces immediate implementation of some of the new provisions in a "Dear Colleague Letter".
  • August: The American Council on Education (ACE) and other associations press the Department of Education for clearer guidance on implementing the bill's changes.
  • September: A new version of the Gainful Employment (GE) rule is implemented. The deadline for related reporting is extended until October 1, 2025.
  • Fall/Winter: Rule making and guidance continue on other provisions of the OBBBA, with the Department of Education anticipating system updates to be completed by winter 2025.

2026

  • January 1: Small businesses can retroactively expense research and experimentation (R&E) costs for the tax year beginning January 1, 2022. Other R&E costs can be expensed in the year they are incurred.
  • July 1:Several major provisions of the OBBBA go into effect:
    • Graduate PLUS Loans: This program is phased out for new borrowers.
    • Student Loan Borrowing Limits: New federal student loan borrowing caps take effect.
      • Lifetime Aggregate Limit: A lifetime aggregate cap of $257,500 is placed on all federal student loans.
      • Graduate Students: A $20,500 annual and $100,000 lifetime limit for most graduate students begins.
      • Professional Students: A $50,000 annual and $200,000 lifetime limit is implemented for professional students in fields like law and medicine.
      • Parent PLUS Loans: A $20,000 annual and $65,000 lifetime cap per dependent is imposed.
    • Loan Repayment Plans: The new Repayment Assistance Plan (RAP) becomes available for new borrowers.
    • Workforce Pell Grants: Eligibility for Pell grants is expanded to accredited, short-term workforce programs (8–15 weeks).
    • Accountability Measures: New accountability standards take effect, which could cut off federal funding for programs if their graduates' median earnings fall below certain benchmarks compared to high school graduates.
  • By June 30: Existing borrowers who must consolidate their loans to access Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), and Pay As You Earn (PAYE) plans must have their consolidation loan disbursed by this date.

2027 and beyond

  • July 1, 2027: Borrowers taking out new loans after this date will have stricter limits on economic hardship and unemployment deferments and forbearances.
  • July 1, 2027: Borrowers can use the loan rehabilitation process up to twice to remove a loan from default.
  • By July 1, 2028: The SAVE, ICR, and PAYE income-driven repayment plans will be phased out, leaving the new RAP plan and a revised IBR plan as the primary options.
  • July 1, 2035: The effective date for the 2022 Borrower Defense and Closed School Discharge regulations is delayed, meaning earlier rules will apply to existing loans.