President Donald Trump’s “One Big Beautiful Bill” Act (OBBB) was signed into law on July 4, passing through major roadblocks and by slim majorities in the House and Senate. The budget reconciliation law overhauls a large number of social programs, federal funding initiatives and yes, educational laws.
First, the rules for undergraduate student borrowers have changed. From the old set of loan repayment options, the OBBB established a new two-option system for undergraduate borrowers: the Repayment Assistance Program (RAP) and the Revised Standard Plan (RSP).
RAP bases monthly loan payments from a 1% to 10% scale, controlled by the borrower’s adjusted gross income (AGI). It is set to replace all other income-based repayment (IBR, which is included under IDR) plans.
Even if the borrower reports zero income, RAP requires a minimum $10 monthly payment. Unpaid interest not covered by monthly payments is forgiven, and up to $50 monthly principal match is awarded to the borrower per dependent. Borrowers using the RAP qualify for loan forgiveness after 30 years in repayment.
RSP is a holdover from the previous repayment system, revised in 2014 and set generally at a flat 10% of the borrower’s discretionary income. Discretionary income is the amount of money an individual has after paying for taxes, housing and food. New loans issued after July 1, 2026 will be automatically enrolled into RSP.
Importantly, all borrowers on alternative plans, like the nearly 7.7 million people on the Biden-era Saving on A Valuable Education (SAVE) plan (including 104,700 Oregonians), are being encouraged to transition to either of the two remaining plans. Oregon itself has 533,700 federal student loan borrowers who cumulatively owe more than $20 billion, via the “Oregon 2025 Student Loan Ombuds Annual Report”.
For borrowers paying off loans taken out before July 1, 2026 using SAVE, the switch has to be done before July 1, 2028, or interest rates on individuals’ SAVE plans will balloon rapidly. The Pay As You Earn (PAYE) Plan and the Income-Contingent Repayment (ICR) Plan are also scheduled to be phased out by that time.
“These cuts are hugely unjustified,” said junior economics and wine double major Sam Ruder. “The benefits of each program outweigh their cost to the public. Our taxpayer dollars cannot and should not be used for tax cuts to the rich, especially when SNAP and other like programs are already underfunded. The entire bill is garbage.”
SNAP, or the Supplemental Nutrition Assistance Program, was subject to a tightening of restrictions under the OBBB. It raises the monthly work requirement to stay eligible to 80 hours a month, requires states to cover a larger portion of SNAP funding and more. 1 in 6 Oregonians are on SNAP, via the United States Department of Agriculture.
Furthermore, those who take Parent PLUS loans after July 1, 2026 will be subject to different loan limits and repayment options.
“Starting on July 1, 2026, Parent PLUS loan borrowers will be capped at $20,000 per year and a total aggregate of $65,000. The change is that previously, parents could borrow up to the student’s full cost of attendance (minus other aid) and were not limited with aggregate caps. This may impact some parents, but I don’t anticipate it will be many,” said Linfield University Vice President for Enrollment Management and Student Success Gerardo Ochoa in an email correspondence.
Parent PLUS loans allow parents to take out educational loans specifically for their dependents. Parents had access to income-driven repayment and forgiveness programs under the old system, but now are limited in options after the July deadline unless under specific circumstances.
“Only Parent PLUS borrowers that consolidate their loans before July 1, 2026, and are enrolled in any IDR plan between now and July 1, 2028, will be eligible for an income-driven repayment plan after the SAVE, ICR, and PAYE plans are eliminated on or before July 1, 2028. Those borrowers will be eligible for the Income-Based Repayment (IBR) plan. They will not be eligible for RAP,” the National Consumer Law Center posted on July 15, 2025.
Specifically for Linfield, the administration is keeping an eye on the changes, many of which will be implemented soon or already have been.
“The thing we are paying close attention to is the parent plus loans and the changes on those limits, along with the changes in graduate student loans. Those are likely to affect our student access to financial aid, although we are probably much less affected than some of our peer institutions,” said Linfield University Vice President of Finance Mike Wenz in an email correspondence.
Graduate students will also be affected by the changes.
“The biggest direct impact on students will be after graduation, particularly for those pursuing a graduate degree,” said Ochoa. “Effective July 1, 2026, the Graduate PLUS loan is being terminated, and students will no longer be eligible for Subsidized loans. Students pursuing graduate degrees who need to borrow more than the annual 20,500 limit, will have to pay for it out of pocket or pursue credit-based loans from private lenders (banks). If a graduate student or a parent of an undergraduate dependent has a Graduate PLUS or Parent PLUS loan made before July 1, 2026, while the student is enrolled in a credentialed program, they may continue to borrow from the PLUS loan program for three academic years or the remainder of the expected time to complete the program, whichever is less.”
The OBBB also changes the limits to the Public Service Loan Forgiveness (PSLF) program, where government workers, nurses, firefighters and specific nonprofit employees can have their federal student loan debt forgiven after 10 years of full payments.
The OBBB allows payments made under the Repayment Assistance Plan (RAP) to count toward PSLF loan forgiveness, assuming all other eligibility criteria are met. Due to the sunsetting of most other plans other than the RAP and RSP, these are the only plans which can be used for forgiveness under the PSLF program.
The law also tightens federal grant and loan eligibility in some ways and expands it in others. For example, the new law mandates that starting in July 2026, students who receive scholarships which cover their cost of attendance to a school will not be eligible for Pell Grants. The Congressional Budget Office reported in April that it estimated the change disqualifies close to 10% of Pell grant recipients. However, the OBBB expands Pell grants by allowing students in non-graduate accredited workforce programs, like some trade schools, to be eligible.
“The One Big Beautiful Bill package will certainly impact federal aid. Without getting too much into the details and nuances, Linfield-funded scholarships and grants students received upon being admitted will not change. We are committed to seeing students through graduation,” said Ochoa.
