economy
February 18, 2026
One big, beautiful drop in student loan subsidies
A new report from the Congressional Budget Office confirms that the One Big Beautiful Bill Act is set to reduce the amount of money taxpayers lose on federally subsidized student loans, reducing federal deficits by hundreds of billions over the next 10 years. There is still more Congress can do to lower higher education costs, but the OBBBA reforms are a good start to build upon.
TL;DR
- The One Big Beautiful Bill Act (OBBBA) is expected to reduce taxpayer losses on federally subsidized student loans and lower federal deficits.
- The OBBBA replaced old income-driven repayment programs with new Repayment Assistance Plans, eliminating $0 payment plans and extending debt forgiveness timelines.
- The OBBBA also introduced borrowing caps on parental and graduate loans, reducing federal loan spending.
- Federal government losses per dollar loaned have decreased from 18 cents to 4 cents due to the OBBBA reforms.
- Further reforms are recommended, including program-level accountability and institutional risk-sharing, to condition federal aid on student outcomes and reduce higher education costs.
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