New Law Eases Repayment Rules and Boosts Pell Grant Funding
On July 18, 2025, the U.S. Department of Education rolled out immediate changes to federal student aid under the One Big Beautiful Bill Act (OBBB), signed by President Trump on July 4.
The law removes the financial hardship requirement for income-based repayment (IBR), enabling more borrowers to access plans with 10% discretionary income payments and 20-year loan forgiveness.
Parent PLUS loan borrowers now qualify for IBR, while part-time students face reduced loan limits proportional to enrollment.
The OBBB also reinstates 2020 regulations for borrower defense and closed school discharge, delaying Biden-era rules.
Acting Under Secretary James Bergeron called it a “historic win,” addressing a $10.5 billion Pell Grant shortfall and supporting career-focused programs.
The changes aim to streamline repayment and boost workforce training. Further guidance will follow as provisions phase in through 2026.
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