Understanding the Impact of the One Big Beautiful Bill Act on Education
- Prestige Institute
- Jul 29
- 3 min read
Updated: Aug 18
Signed into law on July 4th, the Republicans’ “One Big Beautiful Bill Act” (OBBA) introduces sweeping changes to K-12 and higher education. However, it also brings uncertainty to the future of federal education policy. Here’s a breakdown of how specific provisions of the OBBA affect you and your education as students and parents.
How Medicaid Cuts Affect K-12 Education
K-12 schools rely on Medicaid to help provide services for students with disabilities and low-income students. Medicaid is the fourth largest source of funding for these institutions, according to the School Superintendents Association (AASA).
The Congressional Budget Office estimates that the OBBA will cut federal spending on Medicaid and the Children’s Health Insurance Program by $1.02 trillion. Earlier this year, the AASA surveyed over 1,000 school district leaders from all 50 states and the District of Columbia. They found that 86% of districts use Medicaid funds to support salaries for health staff, such as nurses, psychologists, and therapists. Additionally, half of the districts reported that Medicaid funding supports mental and behavioral health services.
As a result, 80% of respondents projected that cuts to Medicaid, as reflected in the final version of the OBBA, would lead to layoffs of school health staff. Furthermore, over 50% of districts anticipated a reduction in services and resources for students.
How SNAP Changes Affect Free School Meals
Research from the Urban Institute indicates that the changes to the Supplemental Nutrition Assistance Program (SNAP) enacted by the OBBA could cause 22.3 million families to lose some or all of their benefits. Children who lose access to SNAP benefits will also lose their automatic enrollment in free school meals. This change could significantly impact students who rely on these meals for proper nutrition.
Federal Student Loans
The OBBA will completely restructure federal student loan policy. The grad PLUS program will be terminated, limiting graduate students’ borrowing to $20,500 a year. The lifetime cap for graduate school loans will now be $100,000, marking a nearly 30% reduction from the previous cap. Parents and caregivers using PLUS loans to help students pay for college will also face a cap of $20,000 a year, with a cumulative limit of $65,000 per child.
Borrowers pursuing professional graduate degrees, such as in medical or law school, will have their borrowing capped at $50,000 a year, with a lifetime cap of $200,000. This represents a 44.4% increase compared to previous limits.
Additionally, the OBBA establishes a new lifetime borrowing limit for undergraduate and graduate loans at $257,500 per student. The repayment plans will also shift from the Biden-era SAVE plan. Starting July 1, 2026, new borrowers will have only two repayment options. They can choose either a new income-based plan, where they pay at least $10 a month with loan cancellation after 30 years, or a standard repayment plan with fixed monthly payments over 10 to 25 years.
The Importance of Understanding These Changes
Understanding the implications of the OBBA is crucial for students and parents alike. As these changes unfold, it is essential to stay informed about how they may affect your education and financial planning.
By being proactive and seeking out resources, you can navigate these changes more effectively. Whether it’s exploring scholarship opportunities, understanding new loan limits, or finding alternative funding sources, there are ways to adapt to the evolving educational landscape.
Conclusion
In conclusion, the One Big Beautiful Bill Act brings significant changes to education funding and policies. From Medicaid cuts impacting K-12 education to the restructuring of federal student loans, these changes will affect many students and families. By staying informed and seeking support, you can continue to pursue your academic goals despite these challenges.
For more information on how to navigate these changes, consider reaching out to educational resources or financial advisors who can provide guidance tailored to your situation.
SOURCES:
Phoebe Kim
Rising Sophomore, Dartmouth College
Major in Government and English
Contributor, Prestige Institute
Comments