The Big Beautiful Bill Is Now Law: Here’s What It Means for Federal Student Loan Borrowers

The Big Beautiful Bill, a sweeping piece of legislation passed by Congress and now signed into law, includes significant updates that impact a wide range of federal programs—from infrastructure investments and tax policy to education and student loans.

While the bill touches many areas of public policy, federal student loan borrowers should take note of several key provisions that directly affect how they borrow, repay, and, in some cases, receive forgiveness on their student loans.

Let’s break it all down in plain English.

Overview: What the Big Beautiful Bill Covers

The Big Beautiful Bill is a broad federal package that includes:

• Infrastructure and education funding
  
• Tax changes and federal program restructuring
  
• Reforms to the federal student loan system

This post focuses specifically on the student loan-related provisions of the law.

One Unified Income-Driven Repayment Plan

The law replaces multiple income-driven repayment (IDR) plans with a single, simplified plan that will apply to most federal student loan borrowers:

• Monthly payments are capped at 5% of discretionary income for undergraduate loans
  
• Graduate loans follow a 25-year forgiveness schedule, while undergraduate loans are eligible for forgiveness after 20 years
  
• Borrowers at risk of delinquency may be automatically enrolled in this plan

What this means: Borrowers will face fewer options to choose from, which may make it easier to navigate repayment. However, the reduced plan options may limit flexibility for some borrowers with unique financial needs.

New Borrowing Limits for Federal Loans

The bill introduces federal borrowing caps to help ensure borrowers take on manageable levels of debt:

• Annual and lifetime borrowing limits for undergraduates
  
• More structured loan limits for graduate and professional students, with a requirement that schools offer detailed loan counseling

What this means: Students will be limited in how much they can borrow from the federal government. While this may help reduce overborrowing, it may also lead some students to seek private loans, which often have fewer borrower protections.

Public Service Loan Forgiveness (PSLF) Changes

The law also addresses some longstanding issues with the Public Service Loan Forgiveness program:

• Borrowers will benefit from automatic tracking of qualifying payments through their loan servicers and the Department of Education
  
• Eligible payments made under the new unified IDR plan will count toward PSLF
  
• Borrowers who experience servicing errors or delays may have access to a streamlined appeals and review process

What this means: Tracking progress toward forgiveness may be more transparent, though many of the core eligibility requirements for PSLF remain in place.

Interest and Servicer Oversight Reforms

Additional borrower protections include:

• A ban on interest capitalization, meaning unpaid interest will not be added to the principal balance when borrowers enter new repayment phases
  
• New oversight requirements for federal loan servicers to improve accuracy and transparency
  
• Establishment of a Borrower Assistance Office within the Department of Education

What this means: These changes are intended to reduce borrower confusion, eliminate surprise balance growth, and improve the servicing experience.

Forgiveness After Long-Term Repayment

For borrowers with older loans, the law includes an automatic forgiveness provision:

• Federal loans that have been in repayment for 25 years or more will be automatically discharged without requiring a separate application

What this means: Longtime borrowers could see debt cancellation without additional paperwork, provided their loans and payment history meet eligibility criteria.

What’s Not Changing

Several key components of the federal student loan system remain unchanged:

• Public Service Loan Forgiveness (PSLF) is still an open program
• Subsidized and Unsubsidized loan programs continue
  
• Parent PLUS and Grad PLUS loans remain available, though subject to the new borrowing caps
  
• Deferment, forbearance, and hardship programs still exist under current guidelines

How Borrowers Can Stay Informed and Take Action

With the law now in place, many of the changes will roll out over time as the Department of Education updates systems and implements new processes. Borrowers can take the following steps:

• Log into StudentAid.gov to check loan types, servicer information, and repayment status
  
• Watch for updates from the U.S. Department of Education about implementation timelines
  
• Contact your loan servicer to confirm how your repayment plan or forgiveness eligibility may change under the new law

Need Help Navigating the New Landscape?

If understanding and managing these updates feels overwhelming, you’re not alone. That’s where PeopleJoy can help.

We partner with employers to support employees with:

• Student loan repayment guidance
  
• PSLF tracking and support
  
• Personalized repayment strategies under new federal rules

📣 If your employer doesn’t offer PeopleJoy yet, you can recommend it.

👉 Share this message and link with your HR or benefits team:
“I’d love access to PeopleJoy’s student loan support as an employee benefit. It would help me navigate the new federal changes with confidence. You can learn more about it here.”

How to Move Forward

The Big Beautiful Bill introduces substantial reforms to the federal student loan system as part of a larger legislative package. While many of the changes aim to simplify repayment and increase borrower protections, the new rules also introduce borrowing limits and remove some repayment options that offered flexibility in the past.

As these provisions take effect, staying informed—and having the right guidance—can make all the difference in how you manage your loans going forward.