Changes to federal student loans that took effect on July 1 will change how some students at local colleges finance their education.
Representatives from Southern Virginia University, Virginia Military Institute and Washington and Lee University said incoming undergraduate students won’t see major immediate impacts because of the changes.
But law students at W&L will face a changing borrowing landscape with the removal of graduate PLUS loans and a more generous limit on unsubsidized loan amounts. And changes to repayment plans will leave undergrads with more limited options after they finish school, said Tyson Cooper, SVU’s See Loan page B12 vice president of finance.
“It definitely reduces some of the flexibility that students used to have in repaying their student loans,” he said.
The revision of federal student loan policy became law last year as part the broad tax and spending legislation known colloquially as the “Big Beautiful Bill.” President Donald Trump advocated for the bill, which he signed into law on July 4, 2025.
Not everyone will be immediately affected. Those who started borrowing before July 1 will continue to borrow under the old rules for three years, or until the date the borrower is expected to finish their program – whichever comes sooner.
And people who were already done borrowing on July 1 will be able to keep paying back their loans under old repayment plans, at least for a couple years.
For everyone else, though, the new federal student loan system is here.
Undergraduate Students Cooper said some of the most significant changes for undergraduate students are new annual and aggregate caps on how much parents can borrow from Federal Direct PLUS Loans.
Previously, parents could borrow as much as they wanted using these loans, as long as it wasn’t more than the attendance cost minus financial aid. Now, each student can only get $20,000 a year in parent PLUS loans.
Over the student’s entire time at college, parent PLUS loans are capped at $65,000. There was no aggregate limit before July 1.
W&L has about 1,900 undergraduate students and covers all demonstrated need through grants and workstudy – not loans.
But Pascale Couturier, W&L’s assistant financial aid director, wrote in a statement to the The News-Gazette that some families do take out loans to meet costs that don’t fall within their demonstrated need.
According to the U.S. Department of Education’s College Scorecard, 5 to 10% of W&L students use parent PLUS loans. Families who take out a parent PLUS loan have a median debt of $45,536 post-graduation. Some of them could be impacted by the new limits, Couturier said.
“Some families may be unable to borrow the full amount they were hoping for during a student’s final year,” she said in her statement.
Cooper said that SVU attendees shouldn’t be hurt much by the new caps because students don’t typically pay enough for it to be an issue.
For SVU’s 900 undergrads, tuition is about $11,000 a semester. That means the annual cost is a little over $22,000.
But Cooper said the school covers an average of 30% of tuition through financial aid, which puts the actual cost to students between $15,000 and $16,000. Through four years, the average total cost is less than the $65,000 aggregate limit.
Five to 15 % of SVU students use parent PLUS loans, according to the College Scorecard. Families who take out a parent PLUS loan have a median debt of $16,819 after leaving school.
“We’re not having to do a whole lot different,” Cooper said. “Just because we’ve already and historically have tried to keep school as affordable as possible.”
The News-Gazette also reached out to VMI, which has an undergraduate population of about 1,500, to see how its cadets would be impacted by the loan changes.
“The changes do not affect VMI significantly,” said Marianne Hause, the institute’s press contact.
According to the College Scorecard, 5 to 15% of cadets use parent PLUS loans, and their median post-graduation debt on these loans is $35,960.
Graduate Students
W&L, whose law school enrolls a little under 400 students, i s t he o nly o ne of t he three local universities that gives out any graduate degrees. Couturier said the July 1 changes will have a bigger impact for law students.
The Big Beautiful Bill eliminates Federal Direct PLUS Loans for any student in a graduate or professional program. It also changes the limits on how much students can receive in Direct Unsubsidized Loans.
An unsubsidized loan requires the borrower to pay interest, unlike a subsidized loan that typically has its interest covered by the federal government.
Previously, students in a graduate of professional program could borrow up to $20,500 a year in Direct Unsubsidized Loans. Now, the limit has been raised for students in programs defined as “professional” by the U.S. Code of Federal Regulations.
Professional programs include those conferring certain degrees in medicine, law and theology. Students in these programs can now borrow $50,000 annually.
Across all their years of study, students in professional programs can borrow up to $200,000 in unsubsidized loans. This limit includes any subsidized or unsubsidized loans taken out to cover other professional or graduate programs but does not include undergraduate loans.
For graduate programs, the aggregate limit is $100,000 – including loans taken out to cover other graduate programs. The previous cap for both graduate and professional programs was $138,500, but this included undergraduate loans as well.
“Luckily, because W&L’s School of Law is considered a professional degree program under the new regulation, law students will be eligible for the higher Direct Unsubsidized Loan limits available to professional students,” Couturier said in her statement.
Repayment
The Big Beautiful Bill also changes how students and families can pay back their loans. Before July 1, several repayment plans existed for undergraduate, graduate and professional students. Going forward, there will only be two. Both require monthly payments.
Under the Tiered Standard Plan, the limit for how long a borrower can take to pay back their entire loan varies depending on the principal amount owed. The longest timeframe, for those who owe $100,000 or more, can stretch up to 25 years.
The other option is the Repayment Assistance Plan (RAP), which takes into account a borrower’s income and dependents when determining how much they will pay each month.
Borrowers who receive any loans after July 1 must use one of the two plans. The Tiered Standard Plan can be used for any federal loan repayment, while RAP cannot be used for parent PLUS loans.
Those who have already received all their loans may continue to use old repayment plans, including but not limited to the Standard Repayment Plan, the Income-Contingent Repayment (ICR) Plan and the Pay As You Earn (PAYE) Plan.
But ICR and PAYE will both become unavailable for all borrowers on July 1, 2028.
“We’re working on a transition plan for borrowers who are enrolled in either the PAYE Plan or ICR Plan,” the Federal Student Aid office wrote on its website.
Couturier said in her statement that it’s too early to tell how exactly the repayment changes will impact W&L graduates. She specifically cited concerns over a lack of eligibility for the Public Service Loan Forgiveness (PSLF) program, which erases the debt of Federal Direct Loan borrowers who work in public service and have completed 120 payments.
Under the new legislation, those using the Tiered Standard Plan do not qualify for PSLF. It does apply to RAP, though.
“It remains to be seen how the new repayment plans will affect borrowers long-term,” Couturier said.
An Uncertain Future
For now, both Cooper and Couturier said there won’t be a major change in how their schools advise students.
“The core approach to counseling students is not expected to change,” Couturier said in her statement. “We will continue to encourage students to minimize their borrowing whenever possible and ensure that borrowers are aware of the terms and long-term implications of any loans they choose to take.”
Couturier said she expects W&L students to use more private student loans now that federal options are more limited. She said the university is now working with ELMSelect, an online tool that helps students weigh their private loan options.
But she said she still doesn’t know for sure how many students will decide to switch over to private loans.
“These changes are still very new, and it is too early to know whether that shift will occur to the extent we expect,” she said.
