How Trump's Big Beautiful Bill makes college less affordable
Fewer loan dollars, incentivizing "workforce training" scams, harder to repay loans — H.R. 1 makes college less affordable for virtually all Americans.
Good Monday morning. Today, American Doom intern reporter Chloe Hall takes a dive into the effects of H.R. 1 on American’s student loan programs. Bottom line: it’s not good. Read her report below, which contains a ton of helpful information that you won’t find elsewhere. This is the type of important public service journalism that often gets lost in the shuffle of the palace intrigue and corruption-based chaos of the Trump administration. To support our work, please consider a paid subscription to American Doom. - jg
President Donald Trump’s One Big Beautiful Bill will drastically alter the nation’s student loan systems when it goes into effect next summer — likely making it harder for middle- and low-income students to afford college.
Within the 870 unread pages of policy-altering legislation are sweeping changes to the Higher Education Act of 1965, which was written and passed into law as a way to provide financial assistance and other resources to college students. As part of Republicans’ vows to undo the student loan forgiveness plans of former President Joe Biden, H.R.1 reverses course on the student loan system by limiting loan amounts, altering repayment and financial assistance plans, and makes many changes to Pell Grants, which are one of the main sources of funding that help low-income families to send their children to college.
Mike Pierce, the executive director and the co-founder of the national nonprofit Student Borrower Protection Center, explained that H.R. 1 will create affordability issues across the board for students entering undergraduate and graduate programs, while simultaneously creating changes with Pell Grant distribution and loan access.
“The bill is going to make things more expensive for everybody. Across higher education, across the landscape of repaying debt,” Pierce said. “This bill sucks hundreds of billions of dollars that used to be in the student loan system out and redirects it to tax cuts to corporations and billionaires.
Less money for students
Under the bill, loan programs will have fewer dollars available to help students, especially those pursuing graduate degrees.
“Within higher education, there are definitely winners and losers,” Pierce said., the government eliminated the GRAD Plus program completely.”
Prior to the bill, students could take out loans under the GRAD Plus program that would cover the entire cost of their tuition. H.R. 1 effectively eliminated GRAD Plus loans. Additionally, Stafford loans for graduate students are now capped at $50,000 year. The bill also caps Stafford loans at $100,000 for students pursuing a masters degree, and $200,000 for those studying to become lawyers and doctors.
Pierce said the changes are further exacerbate the “winners and losers” of higher education.
“Grad students just have much less access to federal student aid than they did before this bill,” Pierce said, adding that caps on loans for graduate degrees won’t even pay for many degrees. “Those limits are pegged at less than what the programs charge for professional degrees.”
For undergraduates, the bill limits Stafford loans to $20,000 per student and caps loans taken out by parents to $65,000 per student.
Along with the introduction of caps on borrowing for students undergraduate and graduate school, H.R.1 imposes limits on what parents can borrow through the parent plus loan program — thus limiting access to college for those who can’t simply pay for it themselves.
“By messing with those levers, what you’re going to do is limit access to guaranteed financing for middle and working class families,” Pierce said, “Thats going to result in fewer middle class and working class families going to college, and will result in more middle and upper class families going through the private student loan market to fill that gap.”
Targeting low-income degrees and encouraging scams
Of H.R. 1’s many provisions, perhaps the most devastating are new rules that give colleges and universities the authority to set lower loan limits based on how much money students can expect to earn in their degree field “as long as the limits are applied uniformly within programs,” according to the bill.
This change will allow colleges and universities to set lower loan limits for whatever programs they choose while simultaneously choosing to raise prices of tuition and other costs for colleges, according to Pierce.
Not only does the bill prioritize higher-income degree fields over those that typically have lower earning potential — degrees in fields like social services and the arts and humanities — it also opens doors to companies looking to take advantage of Pell Grant funds in sometimes predatory workforce training programs.
Low earning outcomes are based on the median earnings of those who are not enrolled in a bachelors program and who are aged 25-34. This unfairly puts an undergraduate in a position where their earning power as an entry level worker just out of college is compared to older workers already settled in their careers — and have earned promotions or secured on-the-job.
“It’s a new flavor of a set of ideas that have been around in the student loan system and in higher education policy for a long time,” Pierce said as he explained the idea of gainful employment. “There was a provision that’s been in federal law for a long time that only applied to career training called gainful employment. That schools were required to train you for gainful employment.”
The same scenario is applied for those looking to go to graduate school, comparing their projected earnings to the median earnings of a working adult aged 25-34, who only has a bachelor’s degree. If a student’s earning potential projected to be less less than a working adult between 25 and 34 years old, they are no longer eligible.
Even provisions in the bill that expand grants for students enrolled in “an eligible workforce program” are not as advantageous as it may seem, Pierce said.
Pierce warned that private companies looking to offset labor costs could take advantage of grants tied to workforce programs.
“Now we’re going to let people be targeted by marketing from private companies that are offering career training, and they’re going to loot the Pell Grant program,” Pierce said.
With limits on how much Pell Grant money a person can obtain, Pierce said it’s possible that students will waste those scarce resources on workforce training programs that don’t provide as much benefit as college degrees.
“You’re going to end up with a lot of people who use those Pell Grants to go get short term certificates and things that have no value — maybe actual scams — and we’re going to have to trust that the Trump administration will protect [students from] those scams, which they clearly don’t care about,” Pierce said, noting that the Trump administration had “fired most of the people” in the Department of Education who watch warn students about workforce training scams.
“It’s going to be open season on everybody who can be hooked on promises to access the middle class and American dream,” Pierce said.
New rules for Pell Grants also prevent students from accessing those loans if they are pursuing or have already earned a graduate degree further discouraging students from earning degrees instead of just accepting workforce program opportunities, according to Pierce.
“Were going to watch a lot of really sketchy programs, for profit colleges but also private companies, that get into bed with community colleges and open enrollment schools, offering six week courses in everything you could imagine to try to get at low income people’s Pell Grants,” Pierce said. “It is going to ruin people’s lives, it’s going to permanently block them from using Pell Grants to pay for bachelor’s degrees because they will have torqued that opportunity, those federal benefits, going towards something that’s useless.”
Harder to repay loans
Not only will students of all income levels and degree types have less money available to help them pursue their degrees, but H.R. 1 also does away with several programs that help students pay back their loans.
The bill effectively eliminates the Saving on a Valuable Education (SAVE) Plan, the Pay As You Earn (PAYE) plan, and the Income-Contingent Repayment (ICR) plan.
For loans made on or after the bill’s provisions go into effect on July 1, 2026, students will be forced to choose between the two payment plans provided by the legislation. One of those options is the Repayment Assistant Plan, RAP.
“Every borrower in every community, regardless of their income, regardless of their family situation, will be paying more under this law than they would have been under the plan that Biden laid out,” Pierce said.
For example, some loan borrowers will not be eligible for RAP, which requires them to enroll in the Standard Payment Plan, as well as any borrowers who do not change their current payment plan by July 1, 2026.
Under the Standard Payment Plan, some borrowers will have to pay the same amount as someone earning tens of thousands of dollars more per year.
H.R.1 even makes it more difficult for students in financial distress to repay their loans. The bill eliminated economic hardship and unemployment deferments for borrowers who receive a loan after July 1, 2026.
“You used to be able to pause your payments for as long as you were experiencing financial hardship,” Pierce said. “That’s no longer the case.”
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