By Felicity Flynn
Staff Writer
The One Big Beautiful Bill Act has recently taken effect, reducing several federal student loan options available to undergraduate and graduate students in divisions and industries where the salary is notably low, according to Newsweek.
Commentary has awoken after a Los Angeles Times report put the assessment these new acts would use to declare if a program would receive these loan cuts.
Assessment would happen by comparing the median earnings of the individual four years post grad with the median earnings of a working adult who holds only a high school diploma.
Graduate Programs would be compared to the earnings of workers who held only a bachelor's degree.
OBBA made several changes to student loan offering and repayments, according to PBS. It eliminates the federal grad PLUS loan program which would cover the full cost of attendance for any grad student. It also added a limit on loans of $20,500 per year or $50,000 per year for certain "professional studies” such as doctors, vets and lawyers.
This act in action has cut off students in lower paying fields from access to federal student loans, mainly affecting the studies of social work, art, religious studies, music, teaching assistance and cosmetology as found by The New Republic. The source also cited concerns that while these studies have low salaries they are socially valuable and losing professionals in these areas would be detrimental.
The Department of Education responded, “This is fake news at its finest” on the X platform after The New Republic posted its claims.
“Federal student loans are not a welfare program for failing college programs. American students deserve education and training pathways that prepare them for the workforce – and transparency about programs that will never pay off,” stated the Department of Education in Newsweek.
The department continued to defend the act by stating, “First off, we’re not ‘banning’ any program. The federal government doesn’t set curriculum or programs,” and added that OBBA was preventing colleges from leaving students with heavy debt that would not translate into improved employment prospects, according to Newsweek.
The Los Angeles Times reported that an estimated three percent of bachelor's and advanced degree programs at public and nonprofit institutions will fail the test compared to an estimated one third of programs at for-profit universities.
This elimination of loans had led to multitudes of students turning to state based loans to cover their cost, according to PBS.
While state student loans can be good options for some borrowers, they typically don't come with the protections of federal loans, such as forgiveness and income-driven repayment plans, which are not available in most states, PBS continued.
There are several drawbacks to using state loans compared to federal loans.
States have the ability to garnish wages or take money out of the individual's paycheck if they default on their loan.
State lending agencies can use creditworthiness to determine eligibility; while federal loans are available to everyone regardless of credit, state loans rely on a credit score. Experts worry this could box out lower income borrowers, CBS reported.
"You should be reading the terms and conditions and understanding how much you're borrowing, what the payment's going to be, and what your options are going to be if you can't pay it," a reporter from PBS stated.
If students need to borrow money for college, experts say they should exhaust all their federal options first.
