The ‘One Big Beautiful Bill' is reshaping student loans at the University of Michigan: Pell Grants, caps, and repayment changes explained

Time of India

21 hours ago

On July 4, President Donald Trump signed into law the
One Big Beautiful Bill Act
(H.R.1), a wide-ranging federal budget reconciliation package that has already sparked a wave of policy debates across the country.
Among its many provisions, including tax reforms and defense spending increases, the bill introduces substantial changes to federal student loan programs.
For students, alumni, and faculty at the University of Michigan, these shifts are not just administrative, they may directly alter access to funding, repayment pathways, and career choices.
The legislation's education provisions draw heavily from prior proposals, including the
Bipartisan Workforce Pell Act
, and reflect a renewed push by lawmakers to limit long-term federal loan exposure while expanding short-term job-oriented training options. As reported by
The Michigan Daily
, members of the U-M community are closely watching how these adjustments may reshape student opportunity and financial planning in both undergraduate and professional education.
Pell Grants
: Expanded eligibility, limited certainty
One of the more widely welcomed changes under H.R.1 is the expansion of Pell Grant eligibility. Originally targeted towards low-income students enrolled in degree-granting programs, Pell Grants can now be used for shorter-term certificate programs, including many offered by trade schools and community colleges.
Jeremy Wright-Kim, an assistant professor at the University of Michigan's Center for the Study of Higher and Postsecondary Education, told
The Michigan Daily
that this extension may benefit working adults and those seeking fast, career-aligned skills.
by Taboola
by Taboola
Sponsored Links
Sponsored Links
Promoted Links
Promoted Links
You May Like
Treatment That Might Help You Against Knee Pain (Search Here)
Kneepain | Search
Search Now
Undo
'These shorter-term certificate programs are good if your local labor market needs to fill that need,' Wright-Kim said. 'There are also students who are more likely to be attracted to those programs, like working adults who maybe can't attend a full-time, longer-term credential program.'
While this change is intended to strengthen workforce pipelines, education policy researchers have cautioned that outcomes for such programs vary widely.
Certificate programs can offer a quick return in certain technical fields but may lead to minimal wage gains in others. Students are encouraged to review completion rates and post-program earnings data through the College Scorecard before enrolling.
Repayment plans: Fewer options, more questions
Beginning July 1, 2026, the number of federal student loan repayment plans for new borrowers will be reduced from seven to two. These will include a standard plan with fixed monthly payments and a new income-based plan requiring a minimum of ten dollars per month.
Existing borrowers who took out loans before that date will retain access to current income-based plans until they are phased out by mid-2028.
Michigan Law alumnus Ryan Jansen described the decision to consolidate plans as reasonable in theory but frustrating in execution.
'The new repayment plans, compared to some of the changes, aren't as bad as they may seem at first glance,' he said. 'I don't think the idea of trying to consolidate plans is inherently bad.'
However, Jansen noted that accessing reliable information about how these changes will be implemented has been a challenge. He expressed concern about communication gaps from the Department of Education and federal loan servicers, especially following recent layoffs within the department.
'I haven't had any information from the Department of Education, from FAFSA or from my third-party loan servicer, explaining these changes and what I may or may not need to do,' Jansen told
The Daily
.
'There are fewer people working and more people trying to get information.'
The University of Michigan's Office of Financial Aid has acknowledged the current lack of detailed guidance. On its official website, the office states it is actively monitoring updates and will inform students once formal directions are issued by the US Department of Education.
Borrowing caps: Professional education under pressure
Perhaps the most contentious component of the bill for U-M students is the imposition of new borrowing caps.
Starting in 2026, a lifetime limit of 257,500 dollars will apply to all federal student loans. Annual caps will also be introduced: 20,500 dollars for graduate students, 50,000 dollars for students pursuing professional degrees such as law or medicine, and 20,000 dollars per year for Parent PLUS loans, with a 65,000-dollar lifetime cap.
These caps mark a sharp departure from the previous system, where graduate and professional students could borrow up to the full cost of attendance through Grad PLUS loans.
The implications are especially concerning for students at institutions like Michigan Law or Michigan Medicine, where annual costs can exceed 100,000 dollars.
Jansen noted that while Michigan Law offers competitive merit scholarships, most students still borrow more than 50,000 dollars annually. 'If you took out money in undergrad, you're going to maybe hit that lifetime cap much sooner,' he said. 'I don't think 50,000 dollars a year makes law school accessible for most people.'
Alex Braun, a rising junior in the College of Literature, Science, and the Arts and officer-at-large for the College Democrats at U-M, voiced similar concerns. Speaking with
The Michigan Daily
, Braun said the new limits may deter students from lower-income backgrounds from entering critical professions, particularly in healthcare and law.
'We already have a shortage of doctors in the US,' Braun said. 'These changes are going to make it worse and create more barriers to those higher educations.'
Will tuition costs adjust?
Proponents of borrowing limits argue that by capping how much students can borrow, colleges will face pressure to rein in tuition growth. However, higher education experts, including Wright-Kim, remain skeptical.
'It's very hard for institutions to lower their tuition rates because education is an expensive enterprise,' he said. 'We would be more likely to see different groups of students not being able to attend, as opposed to colleges saying, 'We're going to make it cheaper for you.''
Most tuition increases are driven by rising operational costs, such as faculty salaries, technology upgrades, and student services. Without substantial state or federal subsidies, institutions have limited flexibility to lower costs without compromising quality.
A moment of reckoning
For a university deeply invested in public service, research, and academic excellence, the changes introduced through H.R.1 are being met with a mix of concern and cautious optimism.
While expanding access to short-term credentials may align with workforce needs, reduced flexibility in repayment and tighter borrowing limits could create unintended barriers for many students pursuing advanced degrees.
Braun summed up the sentiment felt by many on campus. 'I'm so used to being in a community where everyone supports and encourages higher education,' he said. 'To see a divestment in higher education from the federal government is alarming and a little shocking to me.'
As students return to campus for the fall semester, many will be looking to university financial aid offices, policymakers, and advocacy groups for clarity and support. Until more guidance is issued by the Department of Education, the impact of the
One Big Beautiful Bill
will remain a subject of both speculation and serious concern.
TOI Education is on WhatsApp now. Follow us
here.
Ready to navigate global policies? Secure your overseas future. Get expert guidance now!