The way students and parents pay for higher education will change as the Republican-sponsored “One Big Beautiful Bill” legislation is enacted.
On Thursday, the Tennessee Higher Education Commission (THEC) discussed how President Trump’s “One Big, Beautiful Bill” would impact higher education. The policy affects federal student-aid asset calculation, loan repayment and limits, and more. The changes coincide with an uptick in tuition and fees for the 2025-2026 academic school year.
Information from the THEC shows that locally, government institutions — such as the University of Memphis — are seeing an average total fee increase of 5.2 percent. Community colleges are averaging 3.5 percent while Tennessee Colleges of Applied Technology increased by 3.3 percent.
In June, the University of Memphis Board of Trustees voted to increase tuition by 4.92 percent for the upcoming school year. School officials said tuition and mandatory fees “support” educational and general operation costs.
“Along with the [tuition] increase, the university is focused on optimizing current resources, including possible budget reductions to provide a successful outcome for every student,” a U of M statement said. The [mandatory fee] increase will fund inflationary cost increases for software and operations, scholarships, technology infrastructure, safety and security, and student success initiatives.
THEC executive director Steven Gentile said that loan-repayment plans have been simplified through Trump’s bill for past, current, and future borrowers during the organization’s quarterly meeting on Thursday.
Borrowers will be put on either an income-driven or standard payment plan. Gentile noted that one of the major changes is that everyone will be required to make payments towards their student loans.
This policy differs from the Saving on a Valuable Education (SAVE) plan which doesn’t require those at 225 percent of the federal poverty line to make payment towards their loans. Interest does not accrue under SAVE.
Those who took out loans prior to 2014 will now have 15 percent of their discretionary income go towards loan repayment with forgiveness after 25 years. Post 2014 borrowers will have 10% of their income taken out with forgiveness after 20 years.
“The minimum payment is going to be $10,” Gentile said. “This is ensuring that principles are drawn down over time.”
Borrowers will also have loan limits depending on their program starting July 1, 2026.
“Master’s programs (3 years or less) will be capped at $20,500 annually, total of $100,000 lifetime,” THEC said. “Professional programs (MD, Ph.D., JD, etc.) will be capped at $50,000 annually, $200,000 lifetime.”
These caps are in addition to loans taken out during the borrower’s undergraduate career with a $257,000 lifetime limit.
Parent PLUS loans are also being capped at $20,000 annually and $65,000 lifetime per student.
Gentile said the bill also imposes new accountability measures for all institutions. Undergraduates will not be able to take out loans in programs where “majority of completers earn less than the median high school graduate in the state.”
These earnings will be calculated four years after graduation.
Graduate students will be banned from taking out federal student loans for programs where the “majority of completers earn less than a bachelor’s degree recipient in the same field.”
“There are a lot of instances in this bill that make sense,” Gentile said. “We want students to be able to graduate and have a wage that is reflective of having gone in an academic program and putting them in a better spot than they would’ve been if they did not go.”