Courtesy of Sasun Bughdaryan
On the afternoon of July 4 last year, on the South Lawn of the White House, President Donald Trump signed the One Big Beautiful Bill Act into law. The legislation, which includes cuts to Medicaid, food benefits like SNAP, and clean energy initiatives such as EV tax credits, also includes a major overhaul of the Federal Student Loan Program. The cuts aim to reduce federal spending and scale back federal involvement in social programs, one of the major policy objectives of the Trump administration.
Although Connecticut College students can expect the following changes to take effect July 1, 2026, legacy provisions grandfather in current borrowers under several of the changes for up to 3 academic years or the remainder of their current degree, whichever is less.
One of the biggest changes involves Parent PLUS loans. Under the new federal student loan system, Parent PLUS loans will be capped at an annual limit of $20,000 per child and a lifetime limit of $65,000 per child. Previously, parents could borrow up to the full cost of attendance.
With tuition, room and board, and other indirect costs continuing to rise nationally, these loans have been necessary for many middle and lower-income families wishing to make a private education possible.
According to Sean Martin, Director of the Connecticut College Financial Aid Office, Parent PLUS loans have historically helped bridge the gap between the cost of attendance and available financial resources for many Connecticut College families.
He told The College Voice: “Limiting the total amount they can borrow (annually and aggregate) will force some families to reconsider their options. It is possible that families looking to borrow may look at private loans as an option – either in full or to supplement the amount of PLUS they choose to borrow.”
Graduate and professional students will also see major changes. The Grad PLUS loan program will be eliminated starting July 1. The new system will cap graduate borrowers at taking out $20,500 per year and professional programs at $50,000 per year. In addition, a lifetime limit will be imposed: $100,000 for graduate students and $200,000 for professional programs.
The elimination of Grad PLUS may affect students planning to take their education past the undergraduate level, including Connecticut College students in pre-med, pre-business, pre-law, and other fields that require graduate degrees. With the cost of these advanced degrees remaining high, borrowers could see a greater need to rely on private lenders to cover the gap.
Deb Brunetti, the College’s pre-law advisor, told The College Voice: “The elimination of the Grad PLUS loan program will definitely prove an added complication in students’ abilities to finance their legal education, especially students from disadvantaged backgrounds. Greater reliance on privately-sourced loans is not optimal.”
From a pre-law advising standpoint, Brunetti encourages students to “educate themselves on the realistic total cost of attending law school, explore what funding options there are, aim for merit scholarship where possible, and perhaps adjust their targeted law schools in order not to put themselves heavily into post-undergraduate debt.”
In addition to program-specific caps, the budget overhaul also places a lifetime limit on federal student loans at $257,500, excluding Parent PLUS loans. At many institutions, including Connecticut College, the annual cost of attendance now exceeds $90,000.
Other big items in the bill include a restructuring of income-driven repayment plans (IDRs), as well as the possibility of wage garnishing and tax refund offsets for those who default on their student loans, although the Department of Education has delayed the latter.
“The Department determined that involuntary collection efforts such as Administrative Wage Garnishment and the Treasury Offset Program will function more efficiently and fairly after the Trump Administration implements significant improvements to our broken student loan system,” said Under Secretary of Education Nicholas Kent in a recent press release.
Beyond student loans, the bill introduces several changes directly affecting colleges and universities. Under the One Big Beautiful Bill, private universities will be subject to an endowment tax of up to 8%, a marked increase from the current 1.4%. However, Connecticut College will be exempt from the new endowment tax because it has fewer than 3,000 students.
Connecticut College will become subject to new federal undergraduate accountability metrics that compare the median earnings of graduates 4 years after completion to those of working adults with a high school diploma or GED. Colleges that fail to meet new federal standards can be penalized and lose direct loan eligibility.
With these changes, colleges across the country will look to make adjustments in the coming years. The Connecticut College administration is likely already doing so. While the current year’s comprehensive fee represents a ~4.5% increase over the previous year, this rate has gone down to ~3.5% for the 2026-27 academic year. This adjustment comes amid the College’s ongoing budget constraints and the new federal lending limits.
“Institutionally, we are committed to continuing to meet the full demonstrated need of all of our students and these changes do not affect that,” said Martin.
“We’ll continue to do what we’ve always done. Which is to say, our primary focus is to continue to provide as much need-based aid as possible to students, given our limited resources. We will also continue to work with students and families to help them navigate their financing options.”
Taken together, these changes mark a considerable shift in federal student loans and higher education in general. They will have long-term implications for students, families, and institutions alike. The overhaul introduces new loan caps, eliminates several programs, and reduces federal involvement, altering the federal lending landscape in the years to come.
