When Michigan State University sophomore Zakary Antonelli first heard about how the One Big Beautiful Bill Act would limit the amount of loans students and parents could borrow, he was immediately worried.
He wasn’t alone. He, his older sister, and his older brother are all already paying for their own school, and all three of them want to pursue graduate degrees.
“We’re gonna have to take out student loans for our undergrad, and then on top of that, a ton of loans to cover grad school. And especially now,” the question on Antonelli’s mind is, “is that even gonna be enough?”
The bulk of the bill’s financial aid policies took effect July 1. New borrowers face new annual and lifetime maximums, lower loan amounts for part-time enrollment, and potentially
new limits universities impose on specific programs. Proponents of the limits see them as a means to curb high levels of student debt. Students, parents, and financial aid workers worry the changes will limit opportunities and deny money to the students who need it most.
It’s an active issue in Ingham County, classified as a college town by the American Communities Project, which uses data to analyze and categorize counties nationally. Students at Michigan State University are also a liberal center in Michigan’s competitive 7th Congressional District, where policies from President Donald Trump and congressional Republicans are under scrutiny as midterm elections approach.
Jenni Rutkowski’s daughter Maddie is a featured twirler in Michigan State University’s Spartan Marching Band. Even with grades-based, band, and local scholarships, Rutkowski’s Parent PLUS loans total over $50,000 per year. Those loans, Rutkowski said, “were the only way we were able to provide her this option.”
Historically, Parent PLUS allowed parents “to cover the full cost of attendance (both direct and indirect costs),” according to the National Association of Student Financial Aid Administrators (NASFAA). For parents of undergraduate students, the OBBBA imposed an annual limit of $20,000 and an aggregate limit of $65,000 per dependent student.
Since the OBBBA’s changes target new borrowers, the Rutkowskis will hopefully not have to worry about funding the rest of her undergraduate degree. Their two younger children, both entering college within the next three years, may not receive the same reprieve.
The changes have dredged up fear for Rutkowski. When she learned about the changes, she said, “I will likely spend much of my weekend researching this, because at this moment, I'm just scared.”
Loan shake-ups also pose a dilemma for Anotelli. Unlike the Parent PLUS loan program, the Graduate PLUS program, which also allowed for full tuition coverage, was eliminated entirely.
Anotelli dreams of law school, the cost of which has been increasing annually since 1994, according to a report from the Education Data Initiative. Some of the most expensive and prestigious programs can cost between $75,000 and $80,000 a year for tuition and fees. The OBBBA’s changes cap the yearly amount of loans a professional student can take out at $50,000.
Antonelli knows those numbers well and what they may mean for his education and career.
“If I did all my hard work, and I got into what would be considered a prestigious law school, they charge upwards of seventy-five grand a year in tuition, right?” he said. “And if you’re unable to accommodate for that, then you have to go to a less competitive law school. That might put you in a worse position for getting a job just because you’re unable to afford it.”
As president of the Phi Alpha Delta Pre-Law Fraternity, Antonelli interacts with students like him who shoulder the cost of college themselves, while for others, the matter of loans is a “complete non-issue” because they have family to help them pay. The result is a stark dichotomy where some students “never have to take out a penny in debt” and “some people are, you know, drowning.”
The pre-law sector of Michigan State University may mirror the campus community at large. According to Chad Sanders and Keith Williams, who work in the university’s Financial Aid Office, nearly half of MSU students, on average, rely on student loans to finance their education.
They’ve gotten the sense that students aren’t excited about the OBBBA limitations because it means more students will need to turn to private loans.
Sara Dolan, Chief Financial Officer of Michigan State University Federal Credit Union (MSUFCU), also anticipates an influx of private loan borrowers. Currently, only about 100 MSU students per semester turn to MSUFCU for loans, borrowing between $8,000 and $10,000 on average. Dolan expects those numbers to increase.
“We’ve been preparing because we see this trend and the need from our students as the limits impact them from a federal student loan standpoint. What we’ve been working on is expanding our student loan product offering, and then also the opportunity for parent loans and refinance loans,” she said.
The latter two offerings are brand-new programs for MSUFCU, created specifically to address the fallout of the OBBBA.
Much of the hesitancy surrounding private loans stems from interest rates. Dolan maintains that the rates from MSUFCU, which range from under 5% to just over 10%, are comparable with federal rates, which range from 6.39% to 8.94%. However, a fundamental difference still stands: the interest rate for federal loans is fixed based on the type of loan, while in the private sector, interest rates derive from the borrower’s credit rate.
The NASFAA views the financial aid changes as matters of access. More than five years before the OBBBA, a report from the group warned that limiting access to the Graduate PLUS loan program “could negatively impact underrepresented student populations, especially among black students,” who have historically needed to take out more loans to finance graduate education compared to their white, Hispanic, and Asian counterparts.
Closer to home, Ingham County’s students may experience access gaps like the ones Anotelli sees in the MSU pre-law community. State data designates 50.1% of Ingham County K-12 students as economically disadvantaged.
Those future college students may be destined to feel the squeeze of loan limits more tightly.
As Anotelli put it, “it’s worrying that your options are at someone else’s discretion.”
This story was produced in partnership with the American Communities Project and Michigan State University.
This article originally appeared on Detroit Free Press: New federal loan limits poised to hit Michigan students' pocketbooks
