If you’re making plans to continue your education and earn a graduate or professional degree, you’re probably already aware of the changes to the federal student loan program that will make it much harder to borrow money. But did you know that the changes could affect decisions that undergraduate students make as well? The Big Beautiful Bill that was passed in 2025 includes significant changes to the federal student loan program that go into effect in 2026. Among the more notable changes are strict limits on the ability to borrow and changes to how loans must be repaid including how much will be eligible for forgiveness. The changes come as more questions are being asked about the high cost of advanced education and the value of a college degree in the modern workplace.  

Supporters of the changes claim they will force universities to lower tuition costs and reduce costs for government. Critics contend that lowering the amount that students can borrow through federal programs will push students to more expensive private loans and deter some students from pursuing their dreams. Analysts, noting that many universities are already scrambling to find money to replace research funds cancelled by the Trump Administration, will have few options to lower tuition. Instead, it’s expected that some universities will be forced to reduce or eliminate their graduate programs. The longer term implications of the changes have raised alarm for the health care industry where analysts anticipate significant shortages of labor. Under the new terms, federal loan amounts available to students going forward will not be sufficient to cover the costs of medical, dental, nursing, and other health related degrees.      

Discussion Questions:

  1. Discuss the changes to the federal student loan program within the context of fiscal policy. What is the government trying to achieve with this change? Do the changes have implications for you?
  2. Reflect on the broader implications of fiscal policy. In the case of the change in federal student loans, who do you see as winners? Who are the losers? Explain.