The Big Beautiful Bill: What are Its Implications for Black Student Loan Borrowers?

What you know about student loans might no longer be enough.

The One Big Beautiful Bill Act (commonly referred to as the “Big Beautiful Bill”), which came into effect on July 4, 2025, is a wide-reaching legislative package that extends tax cuts, reduces funding for programs such as Medicaid and SNAP, increases defense spending, and rolls back clean energy incentives.

Furthermore, the 870-page bill introduces major reforms to the federal student loan system. It imposes new borrowing caps for students and parents, narrows repayment plans down to just two choices, and reduces deferment opportunities.

While these changes will undoubtedly affect borrowers nationwide, Black students and graduates, who often carry higher loan balances and face greater repayment challenges, may feel the consequences even more.

What the Big Beautiful Bill Means for Student Loans

Here are the critical proposals that will remold federal student lending:

1. New Borrowing Limits

The maximum borrowing will be $20,500 per year for graduate students, with a lifetime cap of $100,000. For students pursuing professional degrees, such as medicine or law, the borrowing limit is slightly higher. It placed at $50,000 per year, with a lifetime maximum of $200,000. 

Parent PLUS loans will also be capped at $20,000 per student per year, with a lifetime limit of $65,000.

In addition, Grad PLUS loans would be eliminated starting in the 2026-2027 school year.

2. Fewer Repayment Plans 

Come mid-2026, existing income-driven (IDR) repayment plans like SAVE would be replaced with only two options. They are as follows:

• A standard plan with fixed payments over 10 to 25 years, based on how much was borrowed
  
• A new Repayment Assistance Plan (RAP), with monthly payments between 1 and 10 percent of discretionary income and loan forgiveness after 30 years

3. Elimination of Deferment and Forbearance Options

Speaking about loans issued post July 2026, unemployment and economic hardship deferments will no longer be available. These deferments currently allow borrowers to pause payments without accumulating interest. 

Forbearance will still be available, but only for nine months within any 24-month period.

4. Earnings-based Accountability

For colleges whose graduates earn less than the median high school graduate in their state, access to federal student loan programs may be lost.

Implications for Black Student Loan Borrowers

News breaks daily, but it doesn’t hit everyone the same.

Apparently, the bill applies to all borrowers. Albeit, its effects could hit Black students and graduates especially hard. Let’s look at how.

1. Heavier Debt Burdens

Black college graduates carry more student loan debt than other groups. Data from the Education Data Initiative shows they owe about $25,000 more than white graduates.

When we look at the stricter borrowing caps and the elimination of subsidized loan options, many may have to rely on private loans. And it is common knowledge that they typically come with higher interest rates, and fewer protections. This, in turn, could significantly raise total borrowing costs.

2. Higher Risk of Default

Black borrowers tend to take longer to repay loans and have higher default rates. And that could worsen, coupled with increased difficulty to pay off loans.

This will stem from the extension of the forgiveness timeline to 30 years, and increasing monthly payments under the new income-based plan.

3. Fewer Safety Nets During Hardship

The invaluable ability to halt payments during difficult times is eliminated with the removal of unemployment and economic hardship deferments. 

Black borrowers may, as a result, be more prone to late payments, ruined credit, and unstable finances. This is because they are inordinately affected by unemployment, underemployment, and wage disparities.

4. Limited Access to Graduate Education

Many Black students rely on government loans to pursue their graduate and professional degrees. However, due to the stipulations of the Big Beautiful Bill, some people may need to postpone or cancel their plans for additional study.

5. Widening the Wealth Gap

The longer repayment periods and restricted access to aid could make it harder for Black individuals to escape student debt and build long-term wealth.