President Donald Trump signed signature legislation, known as the “Big Beautiful Bill,” July 4 that will reshape American higher education.

The law caps the amount students can borrow for graduate degrees, expands financial aid for workforce development programs and attempts to hold colleges accountable for graduates’ success.

The new law will phase out Grad PLUS loans that many people use to pay for graduate degrees.

“Eliminating Grad PLUS loans is dramatic and potentially problematic for many students,” said Mitchell Henry, president of Faulkner University, a private Christian college in Montgomery.

Getting student loans will be more difficult

The new law caps the amount of federal loans students can take out:

• Graduate students can borrow up to $100,000
• Law or medical students can borrow up to $200,000
• Parents can borrow up to $65,000 per student via Parent PLUS

After a student hits their cap of subsidized direct or PLUS loans, they may need to turn to private loans to finance an education.

The federal government hopes a lifetime cap will encourage universities to keep prices in check.

Financing graduate degrees may be more difficult

The Grad PLUS program, which many students use to fund graduate and doctoral degrees after they exhaust their Stafford loans, will be phased out in 2026.

Current students aren’t affected, but people hoping to pursue graduate degrees after July 1, 2026, may need to finance their education through more private loans.

More than $120 million in Grad PLUS financing was disbursed to 23 colleges and universities across Alabama for the 2022-2023 school year, according to data obtained from the Chronicle of Higher Education.

Faulkner University administered 367 Grad PLUS loans in 2022, and the revenue, about $11.3 million, makes up more than 20% of the school’s overall revenue, according to the Chronicle’s data.

It will be easier to pay for workforce credentials

About 32.7% of all Alabama college students receive Pell grants, according to the National Center for Education Statistics.

The final bill keeps the Pell program mostly intact and adds a “Workforce Pell.” The funding can now be used for short-term, accredited workforce training programs.

Beginning July 1, 2026, Pell-eligible students can use aid for programs that prepares students for high-skill, high-wage, or in-demand industry sectors or occupations.

The average amount Alabama students receive for Pell Grants is $5,167, according to the National Center for Education Statistics.

The process for getting a Pell grant remains the same: Students fill out the Free Application for Federal Student Aid and see if they meet the income requirements.

Colleges will need to prove grads have good jobs

Politicians have struggled with how to force colleges to prove the value of individual degrees. Trump’s bill ties student loans and financial aids to graduates’ ability to get well-paying jobs.

Colleges and universities will be cut off from funding unless they prove that graduates earn more than an adult with a high school diploma. This could affected more than half of two-year degree programs, according to Inside Higher Ed.