OBBBA Will Also Raise Federal Student Loan Costs for Millions of Existing Borrowers

September 16, 2025 | WASHINGTON, D.C. — Moments ago, Aissa Canchola Bañez, policy director for Protect Borrowers (previously Student Borrower Protection Center), testified before the United States Senate at a higher education spotlight forum entitled “Killing the American Dream: How Republicans are Closing the Door on Working and Middle-Class Students.” Her testimony featured a new analysis by Protect Borrowers quantifying how the new “One Big Beautiful Bill Act” (OBBBA) will systemically raise the cost of higher education and push millions of students and families into riskier, more expensive private student loans.

As highlighted in Bañez’s testimony, the data reveal that the OBBBA will not only increase debt for new borrowers but also raise annual costs for millions of existing borrowers who will be forced out of their current affordable repayment plans after July 1, 2028. The analysis also sheds light on the hundreds of thousands of graduate students and parent borrowers that will be forced to fill the law’s resulting gaps in financial aid with more expensive private student loans causing monthly student loan costs to skyrocket and force borrowers to pay thousands in additional interest.

Key findings include:

  • Graduate students will be squeezed: Over 440,000 graduate students each year could be forced to turn to private loans due to the elimination of the Graduate PLUS loan program, and the average Graduate PLUS borrower who replaces their entire loan with a private market option would pay an additional $10,885 in interest.
  • Parents will face higher costs: Between 29 percent and nearly half of Parent PLUS borrowers may be forced to turn to private loans each year due to the OBBBA’s new annual lending caps. The average Parent PLUS borrower who exceeds the $65,000 per-dependent student cap and makes up the gap with private loans would pay an additional $4,608 in interest.
  • New borrowers will pay thousands more: A typical new borrower with a bachelor’s degree can expect to pay over $4,000 more per year under the new Repayment Assistance Plan (RAP).
  • Current borrowers will be hit with massive increases: Millions of existing borrowers could see their student loan costs increase by more than $3,400 per year as a result of being pushed off their more affordable Income-Driven Repayment plans after July 1, 2028.

Bañez’s testimony also emphasized that these changes, coupled with the OBBBA’s massive cuts to Medicaid and food assistance (SNAP), will strain state budgets and likely lead to public university funding cuts and tuition hikes—further increasing the financial burden on students and families.

From her testimony:

“We know that America thrives when it invests in its people, and nowhere is this more true than fulfilling the promise of affordable higher education. Yet for too long, that promise has been systemically broken—shattered by soaring college costs exacerbated by unstable state budgets, the diminishing purchasing power of the Pell Grant, and the proliferation of high-debt, low-quality programs, particularly in the for-profit college industry. Today, millions of Americans are crushed under the weight of a $1.7 trillion student debt crisis. 

“Make no mistake: this crisis is a policy choice. Policymakers over the past half century have allowed our public higher education system to become increasingly privatized, forcing students and families to bear the growing financial burden of what should be a public good.”

The forum was the first hearing since the enactment of the OBBBA.

Further Reading

Read Aissa Canchola Bañez’s full written testimony here.

View a recording of the full forum here: Killing the American Dream: How Republicans Are Closing The Door on Working & Middle-Class Students

Read Protect Borrowers’ full analysis here: The OBBBA Law Makes Paying for College More Expensive and Risky

Read a Fact Sheet breaking down key data from the analysis here: The New “One, Big, Beautiful Bill Act” Law Will Make Paying for College More Expensive and Increase Student Loan Costs

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About Protect Borrowers

Protect Borrowers (formerly Student Borrower Protection Center) is a nonprofit organization led by a team of experts, lawyers, and advocates fighting to build an economy where debt doesn’t limit opportunity. We investigate financial abuses, take predatory companies to court, and push for policies to protect working people from debt traps. We aim to deliver immediate relief to families while building power, driving systemic change, and fighting for racial and economic justice.