As many in higher education, student finance, and the broader student success community have already encountered, the One Big Beautiful Bill Act—signed into law in July 2025—brings about perhaps the most sweeping federal student loan reform in decades. These changes, which take effect July 1, 2026, cause us to rethink how students plan, borrow, repay, and succeed beyond college graduation.
At its core, this policy pivots away from federal lending and a complex web of repayment options toward clearer loan limits and a streamlined system. While the intent is to simplify federal student lending and encourage financial accountability, the practical implications for students, families, and institutions are profound.
What’s Changed for Student Loan Borrowers
The most impactful changes affect two of the largest and historically malleable loan types: Graduate PLUS and Parent PLUS loans.
For graduate students, the discontinuation of Graduate PLUS loans after July 1, 2026, marks a structural shift. Historically, graduate students could borrow beyond the $20,500 in unsubsidized funding allocated annually by way of the FAFSA, and up to their program’s full cost of attendance through the Graduate PLUS program. Under the new framework, borrowers will rely on a maximum of $20,500 in unsubsidized funding annually with a lifetime cap at $100,000. At the same time, a total federal lifetime borrowing cap above all loan types now restricts how much any student can borrow cumulatively.
For parents supporting their student’s education, new restrictions on Parent PLUS loans—limiting borrowing to $20,000 per year and $65,000 per student cumulatively—will reshape family planning for college finances and necessitates tighter budget forecasting. Moreover, later Parent PLUS loans will lose eligibility for income-driven repayment and forgiveness options unless proactively consolidated under legacy rules.
Additionally, the overhaul of income-driven repayment plans into a simplified structure—with only a standard plan and a new Repayment Assistance Plan (RAP)—changes how students will manage repayment post-graduation.
What These Changes Mean for Higher Education
From an institutional perspective, these reforms push colleges and universities to strengthen financial planning education and reassess how program costs align with expected outcomes. Institutions with programs where graduates struggle to earn wages above the cost of attendance may face reputational risk and new accountability standards.
For students, particularly those pursuing advanced degrees or relying on family support via Parent PLUS, these limits mean less reliance on borrowing and greater out-of-pocket planning long before they arrive on campus.
At Arbol, we believe these reforms highlight the urgent need for transparent cost and aid insights early and often in the student life cycle. Schools must equip students with tools not just to enroll, but to understand what they are committing to financially—and how to chart a path that avoids unsustainable debt.
How Arbol Helps Students Close the Gap
Arbol’s platform is designed precisely for moments of consequential change by delivering:
- Cost Transparency
Students can see a complete picture of their education costs—including tuition, fees, grants, scholarships, and the newly limited loan options—before they commit. This matters more now than ever when borrowing limits are stricter.
- Actionable Decision Guidance
With real-time modeling, Arbol helps students understand where gaps exist between expected funding and actual cost, and suggests what steps to take: from maximizing scholarships, choosing affordable programs, or exploring work-study and part-time earnings to supplement constrained federal loans.
- Strategic Planning Tools
By offering aid forecasts through graduation, students and families can plan around borrowing caps—making choices about summer school, sequencing courses, or exploring alternative funding earlier in their college careers.
- Empowered Repayment Visioning
In light of RAP and new repayment structures, tools that help visualize long-term repayment scenarios are vital. Understanding how monthly responsibility changes over time helps students start their careers with confidence, not confusion.
Why Financial Clarity is No Longer Optional
The One Big Beautiful Bill Act is a defining moment in federal student aid policy. Its goals—to simplify loan structures and limit unsustainable borrowing—are clear. Yet, without proactive planning and informed decision-making, students risk facing gaps between what they need to succeed and what they can afford.
At Arbol, we are committed to helping institutions and students navigate this transition with clarity, agency, and actionable plans. This moment isn’t just about adapting to policy changes—it’s about redesigning how we empower learners to thrive financially before, during, and after college.
Let’s build smarter student success together.
Want to learn more? Email James Nowak at james@growarbol.com for a demo that showcases the Arbol experience, affordability plan workflows and how enrollment teams use data-based insight to drive deposits and reduce melt.
