The wide-reaching effects of President Donald Trump's One Big Beautiful Bill Act are being felt by college students and their parents in Tennessee and nationwide as the new school year arrives.
A massive overhaul of federal student loan rules capped how much part-time students, new graduate students and parents of students can borrow to pay for college. It also altered loan repayment options for current and new borrowers. The new rules took effect July 1. However, some borrowers have until 2028 to transition to a new repayment plan.
Becca Smitty, who leads Middle Tennessee State University's One Stop office, said her team has been hard at work communicating the changes to parents and students. The office centralizes financial aid, registration,
tuition, billing and transcript services. While most students and parents are aware of changes to federal loans, she said questions have flowed in around loan limits and eligibility, with some expressing surprise over the new restrictions.
"This is driving many to consider private loans down the road to continue funding tuition and major costs," Smitty said in a July 23 email to The Tennessean.
Here's what Tennessee students, parents and residents still paying back federal student loans need to know about the changes.
Federal loan changes for part-time college, graduate students
While undergraduate student borrowing limits remain unchanged, the new law prorates federal loans based on how many credit hours students are enrolled in for the first time ever.
For both undergraduate and graduate students enrolled less than full-time, loans will be given in direct proportion to the number of hours they are enrolled in courses that meet a degree requirement, according to Smitty. Additionally, students who drop or withdraw from courses may also see a reduction in how much they qualify for the following term.
"It is more important than ever for students to be engaged in their courses so they may not need to drop or withdraw," Smitty said.
At MTSU, Smitty estimated that 25% of undergraduate students who received federal student loans were enrolled less than full-time. For graduate students, that number comes out to 67%.
Limits on how much parents can borrow for college costs
Federal Parent PLUS Loans are now limited to $20,000 per year and a total of $65,000 per student.
Smitty said her office has gotten a lot of questions about the new caps on the federal parent loans. Before now, parents could borrow up to the full cost of tuition and did not face lifetime caps.
Uncertainty, changes around graduate program loans
For graduate students, federal loans are now capped at $50,000 per year and $200,000 overall. Those caps only apply to students enrolled in what the Trump administration deems "professional programs." Nonprofessional graduate program loans are capped at $20,500 per year and $100,000 overall.
As with the federal parent loans, graduate students could borrow up the cost of attendance before now.
The list of professional versus nonprofessional degrees has been the subject of an ongoing court battle, in particular over nursing degrees being dropped from the "professional" list. However, around 20 degrees (including nursing) are back on the list of professional programs after a judge's order last month — at least for now. Smitty said she expects a final decision will come no sooner than December.
Graduate students beginning a new program this fall and beyond will no longer qualify for Federal Graduate PLUS Loans, which are being discontinued.
"Some students who were enrolled before Fall 2026 may qualify for an interim exception, but the school must review each student to determine eligibility," Smitty said.
What to know about loan repayment
A series of changes are also afoot for how federal student loans are paid back. Here's a (very simplified) look at what's changing:
- New federal student loan borrowers will only have two repayment options: the Tiered Standard Plan, which has fixed monthly payments, or the Repayment Assistance Plan, which bases monthly payments on a borrower's income.
- Current borrowers have the option to stay on their previous repayment plan until July 2028 before being required to switch to one of the two new options. However, they have the option to switch sooner if they wish.
More detailed information on loan repayment can be found at StudentAid.gov.
Federal loan resources, tips for parents and students
Smitty said students and parents should review financial information on their school’s website.
She also recommended visiting StudentAid.gov and going to the "announcements" section for the latest information and student borrower scenarios that further explain the changes. There is also a loan repayment calculator linked on the home page of the site that gives students and parents a sense of what it will take to repay loans after graduation.
Smitty said parents and students can also compare private education loan options. They can check whether their school has a list of private lenders it prefers or recommends. She encouraged people to take time to do their research but also to apply early for private loans, as the process takes longer than the federal one.
"The most essential point has not changed," Smitty said. "A college education is an investment in a student's future. But students (with their parents' counsel) should borrow wisely."
Rachel Wegner covers education and children's issues for The Tennessean. Got a story you think she should hear? Reach her via email at RAwegner@tennessean.com. You can also find her on X or Bluesky under the handle RachelAnnWegner.
This article originally appeared on Nashville Tennessean: What TN students, parents need to know amid federal loan changes
