How the “One Big Beautiful Bill” Will Reshape Tuition Reimbursement

The U.S. student debt system is on the brink of its biggest transformation in decades. The One Big Beautiful Bill (OBBB)—a sweeping federal reform package—aims to simplify loan repayment, cap borrowing limits, and reshape how Americans finance higher education.

While headlines have focused on changes to repayment plans, one of the less discussed—but highly consequential—impacts will be on employer tuition reimbursement programs (TRPs). As OBBB takes effect, HR and finance leaders must prepare to adapt their policies, systems, and communication strategies to maintain competitiveness and compliance.

For employers—especially in nonprofit hospital systems, universities, and charter schools—this legislation represents both a challenge and an opportunity: to modernize how tuition support is delivered, ensuring it remains an attractive and accessible benefit in a changing regulatory landscape.

Key Takeaways

• The One Big Beautiful Bill (OBBB) is a landmark student debt reform that will reshape federal loan repayment and employer tuition reimbursement programs.
• A new Repayment Assistance Plan (RAP) and loan caps take effect in July 2026, limiting how much employees can borrow for higher education.
• As borrowing limits tighten, employer tuition reimbursement becomes a critical workforce development tool—not just a benefit.
• The bill introduces inflation-adjusted IRS caps on the $5,250 tax-free tuition reimbursement benefit beginning in 2027, aligning education support with rising tuition costs.
• Employers can stay compliant and competitive by raising reimbursement limits, offering direct billing or stackable benefits, and adopting automated Tuition Reimbursement Systems (TRS).
• Automated TRS platforms improve compliance, efficiency, and audit readiness, cutting admin workload by up to 70%.
• Organizations that adapt early will turn new regulations into a strategic advantage for talent attraction, retention, and workforce growth.

The Bill at a Glance: Loan Caps and System Simplification

The One Big Beautiful Bill will establish a new repayment model, the Repayment Assistance Plan (RAP), which becomes the default option for borrowers after July 2026. This plan introduces a key reform: loan caps for borrowers returning to school.

Historically, adult learners could borrow tens of thousands of dollars per year to finance degree completion or advanced certifications. Under the OBBB framework, total borrowing will be limited based on income, degree type, and dependent status. While this policy is designed to prevent overborrowing, it could also restrict access for employees seeking to upskill through traditional degree pathways.

According to the National Center for Education Statistics, over 38% of students in higher education today are adult learners, and nearly half of them rely on employer tuition reimbursement. Once the new borrowing caps are implemented, that reliance is expected to grow—shifting greater responsibility to employers to fill the funding gap.

What This Means for Employers

1. Tuition Reimbursement Becomes a Workforce Necessity

As borrowing power decreases, tuition reimbursement will evolve from a supplemental perk into a core financial enabler for career development. Employees—particularly in healthcare and education—will look to their employers not only for career mobility but also for financial access to education.

In a recent PeopleJoy survey of nonprofit hospital employees, 72% said they would not pursue further education without employer support. With OBBB’s new restrictions, this dependency will deepen, making TRPs a powerful tool for talent attraction and retention.

Action Step: Review your tuition reimbursement policy to ensure it supports diverse learning pathways—not just degrees but also certificate and continuing education programs that align with organizational goals.

2. Inflation-Adjusted Reimbursement Caps: A Smart Response

For years, the IRS limit of $5,250 in tax-free educational assistance (under Section 127 of the Internal Revenue Code) has remained static, even as tuition costs have steadily climbed. The average cost per credit hour for a bachelor’s program in 2025 is $423, up 18% since 2019—meaning the purchasing power of the $5,250 benefit has eroded over time.

However, based on the recently passed One Big Beautiful Bill Act (OBBBA), that’s about to change. The legislation introduces an inflation adjustment to the $5,250 cap, beginning with tax years starting after December 31, 2026. The first inflation-adjusted increase will take effect in 2027, finally allowing the benefit to rise with education costs.

This update marks a major policy shift—one that reinforces the federal government’s recognition of employer tuition support as a cornerstone of workforce development. Yet, with the OBBB’s new borrowing caps limiting how much employees can take out in loans, even the future inflation-adjusted amount may not fully cover the cost of degree programs or advanced credentials.

Forward-thinking employers can stay ahead of the curve by proactively expanding their tuition reimbursement caps—either in anticipation of the new IRS adjustment or beyond it. Offering higher reimbursement amounts (even partially taxable) can provide an immediate advantage in attracting and retaining top talent, particularly in high-demand fields.

Action Step: Consider implementing flexible, inflation-responsive reimbursement tiers, such as:

• $6,000 for undergraduate degrees
• $8,000 for graduate or healthcare-related certifications
• $10,000 for high-need occupations like nursing or teaching

This data-driven approach signals a long-term commitment to employee development and ensures your tuition reimbursement program retains its real-world value as education costs continue to rise.

3. Bridging Gaps Through TRS Enhancements

The upcoming policy landscape will require greater flexibility in how tuition support is administered. With borrowing limitations in place, employers can step in to bridge funding gaps through enhancements like:

• Direct billing partnerships: Pay institutions directly to eliminate employee out-of-pocket costs.
• Stackable benefits: Combine tuition reimbursement with student loan repayment assistance to support both current debt and future education.
• Scholarship-style allocations: Offer need-based tuition grants for employees with financial hardship.

Data from EdAssist shows that employees who face fewer upfront costs are 3.5x more likely to use tuition benefits—and 2x more likely to stay with their employer for at least three years.

Action Step: Evaluate your current Tuition Reimbursement System (TRS) to ensure it supports multi-source funding, automates eligibility tracking, and integrates with payroll for faster reimbursement cycles.

4. Flexibility and Automation: The Cornerstones of Compliance

With new federal reporting requirements likely to accompany OBBB implementation, manual tuition reimbursement management will become increasingly risky. Employers will need to demonstrate compliance, data accuracy, and employee eligibility in real time.

Automated TRS platforms—those that integrate seamlessly with HRIS and accounting systems—can reduce administrative workload by up to 70% and minimize audit exposure.

Action Step:

• Automate reimbursement approvals, document uploads, and payment tracking.
• Customize eligibility and funding rules to align with new OBBB borrowing limits.
• Monitor usage data to ensure equitable access and fiscal accountability.

Automation not only ensures compliance but also boosts employee trust and program efficiency—both critical as regulations evolve.

Preparing for the Future: Strategic Questions to Ask

To get ahead of the One Big Beautiful Bill’s impact, HR and finance leaders should begin planning now. Consider these key questions:

1. How will new loan caps affect employees currently pursuing degrees?
2. What adjustments should be made to tuition reimbursement policy limits?
3. Can our current TRS technology adapt quickly to new federal compliance rules?
4. Do we have communication strategies in place to explain these changes clearly to staff?
5. How can tuition reimbursement align with broader talent development goals?

Organizations that answer these questions proactively will be better positioned to turn regulatory change into strategic advantage.

The Bottom Line

The One Big Beautiful Bill signals a fundamental reset of how education is financed in America—and by extension, how employers can support lifelong learning.

For HR and C-suite leaders, the priority now is future-proofing your TRS: building flexibility, increasing automation, and rethinking reimbursement limits to stay aligned with evolving employee needs and compliance expectations.

In an environment where access to education is tightening, the organizations that adapt fastest will be the ones that attract, retain, and develop top talent—proving that tuition reimbursement, when modernized, remains one of the most powerful benefits in the workforce toolkit.

If you’re seeing low participation in your program, read Part 2: Why Your Tuition Reimbursement Benefit Isn’t Being Utilized (and How to Fix It).

Next, learn how to expand TRS value with discounts in Part 4: Pairing Tuition Discounts with TRS.