Student Loans Are About To Change Big Time: Suze Orman Explains The Impact Of The 'Big Beautiful Bill' For Borrowers

Repayment Plans Get a Makeover

The bill also changes repayment plans for all federal student loans taken after July 1. There will be two options:

A standard repayment plan with fixed payments over 10 to 25 years.
A new income-driven repayment plan called the Repayment Assistance Plan, or RAP, which ties payments to 1% to 10% of discretionary income.

"But there will be no zero payment options," Orman clarified, explaining that although some current income-driven repayment plans allow borrowers to make zero payments based on financial need, this option will no longer be available starting next year.

Additionally, loan forgiveness under RAP will only happen after 30 years of payments, five years longer than previous plans. Plus, economic hardship deferments will no longer be available starting July 1, 2027, though limited forbearance may still be possible for short periods.

"Why do they want to be able to allow you to do that?" Orman asked. "Because student loans, still in most cases, are not dischargeable in bankruptcy, they can come after you. They can garnish your wages. They can even go after your Social Security check later on in life, and it’s compounding and compounding, so you better be careful."

Graduate Students Face New Borrowing Caps

Graduate borrowing will also be limited. The Graduate PLUS loan program is ending, replaced by unsubsidized loans with annual limits of $20,500 for master's and PhD students and $50,000 for professional degrees, plus lifetime caps.

These tighter limits could mean grad students must plan more carefully or look for alternative funding sources.

What This Means for Families

Orman's advice? Families need to start planning now. Parents should avoid risking their retirement savings by borrowing too much for college. Children should borrow federal loans first, since student loan interest rates are generally lower than Parent PLUS loans.

More than ever, families should explore affordable schools, scholarships, and merit aid. The new rules add complexity to college financing, making it important for borrowers to carefully evaluate their options.

If you're thinking about college costs in your family, sit down with your financial advisor and start conversations early with your children. The One Big Beautiful Bill Act is changing the game, and being informed is your best defense.

Read Next: $100k+ in investable assets? Match with a fiduciary advisor for free to learn how you can maximize your retirement and save on taxes – no cost, no obligation.

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