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5 Ways the OBBBA Impacts Children and Families

Welcome to the Stewardology podcast, where we dive into managing God’s resources for His glory! 

Today, we’re jumping into part four of our series on The Big Beautiful Bill—or as we’re calling it, the OBBBA—and specifically we will look at its potentially massive impact on kids. 

This bold legislation is reshaping financial opportunities for families across America, touching everything from tax credits to investment accounts, student loans, and even government benefits. It’s a game-changer, but it also raises big questions: How do we, as stewards of God’s blessings, navigate these changes to set our kids up for success? Proverbs 22:6 reminds us, “Train up a child in the way he should go; even when he is old he will not depart from it.” We’re not just talking about raising kids in faith but equipping them—spiritually, practically, and financially—for the future. So, buckle up and stick with us as we unpack five key ways the OBBBA affects your kids and what it means for your family’s stewardship journey.

1. Child Tax Credit

The OBBBA boosts the Child Tax Credit from $2,000 to $2,200 per child, with adjustments for inflation to keep it relevant in the coming years. 

For single filers, the income cap is $200,000 MAGI (Modified Adjusted Gross Income), and for married couples filing jointly, it’s $400,000. This increase puts a little more money back in parents’ pockets, which can be a huge blessing for families raising kids in a world where costs keep climbing.

Think about it: an extra $200 per child can go toward school supplies, extracurricular activities, or even savings for the future. 

As stewards, we’re called to manage these resources wisely. Ecclesiastes 11:2 says, “Give a portion to seven, or even to eight, for you know not what disaster may happen on earth.” This verse reminds us to diversify our investments and plan thoughtfully. That extra $200 could very well be a seed planted for your child’s future—maybe in a savings account or a contribution to their higher education fund.

Action Step: If you qualify for the increased credit, pray about how God might want you to allocate it. Could it reduce financial stress or fund a long-term goal for your kids? Consult a tax or financial professional to ensure you’re maximizing this benefit.

2. Trump Accounts

Next up are the intriguing Trump Accounts, a new savings vehicle for kids born between 2025 and 2028. Each eligible child gets a $1,000 initial investment, but the details are still a bit fuzzy. 

This Trump account might be a direct government transfer, or it could involve a $1,000 tax credit when parents fund the account. Either way, parents can contribute up to $5,000 per year per child, and the funds are locked until age 18. After that, withdrawals for qualified expenses—like education or starting a business—are tax-free.

Here’s what we know so far:

  • Eligibility: U.S. citizen children born between 2025 and 2028 who apply for the account.
  • Taxation: Contributions aren’t deductible, but growth is tax-deferred, like an IRA. Qualified withdrawals after 18 are tax-free, but non-qualified withdrawals may be taxed as ordinary income.
  • Investment Options: Funds are limited to U.S. equity index funds, like the Dow Jones or S&P 500.
    • Why is this so important???  More “rocket fuel” like we talked about last episode?
  • Rollover Options: At age 25, the account can be rolled into a traditional IRA or a 529 plan.
  • Unanswered Questions: Who’s the custodian? Can a financial advisor manage it? Where do you open it? These are still TBD, so stay tuned as more details emerge.

This is a fantastic opportunity to teach kids about long-term investing. Luke 16:10 says, “One who is faithful in a very little is also faithful in much.” These accounts are a chance to instill financial discipline early, showing kids how small investments can grow over time. 

But with the uncertainty around the details, it’s wise to proceed cautiously. Consult a financial advisor to understand how these accounts fit into your family’s financial plan.

Action Step: Consider doing some research on U.S. equity index funds to understand their risks and rewards. Talk to your kids about the power of compound interest, and pray for wisdom as you plan for their financial future.

3. Expanded 529 Plan Benefits

The OBBBA supercharges 529 plans, making them more flexible for families. Previously, 529 plans were mainly for college expenses, with a $10,000 limit for K-12 expenses. Now, the limit is $20,000, and the eligible expenses have expanded to include:

  • Curriculum materials, textbooks, and homeschool resources
  • Private school tuition
  • Trade schools, vocational certificates, and apprenticeship programs
  • Tutoring, standardized testing fees, dual enrollment fees, and educational therapy

The annual contribution limit now aligns with the federal gift tax exclusion—$19,000 per year in 2025. States set their own lifetime limits, typically between $400,000 and $550,000 per beneficiary. This expansion makes 529 plans a powerful tool for parents who want to invest in their kids’ education, whether it’s traditional college, trade school, and even homeschooling.

Proverbs 13:22 says, “A good man leaves an inheritance to his children’s children.” While many believe that this verse refers to spiritual inheritance, we believe that it also applies to preparing our kids for their future. 

A 529 plan can be a legacy of opportunity, giving your kids or grandkids a GREAT head start. The tax-free growth and withdrawals for qualified expenses make it a magnified stewardship win.

Action Step: Review your state’s 529 plan rules and consider how the expanded categories align with the planning of your child’s educational needs. If you’re already contributing, explore whether you can increase contributions to take advantage of the new limits.

4. Student Loan Changes

The OBBBA makes significant changes to federal student loans, which could affect kids as they plan for higher education. Here’s a breakdown:

The OBBBA introduces sweeping changes to federal student loans, which could shape how kids finance higher education. These reforms aim to curb excessive borrowing and encourage fiscal responsibility, but they also limit some options. Let’s break down the key changes with clear definitions to help you understand their impact.

  • Parent PLUS Loans: These are federal loans that parents can take out to help pay for their child’s undergraduate education. The OBBBA caps them at $20,000 per year per student, with a lifetime limit of $65,000. Previously, parents could borrow up to the full cost of attendance (minus other aid), which often led to significant debt. This change protects families from overborrowing but may require exploring other funding sources like scholarships or personal savings.
  • Grad PLUS Loans: These loans are for graduate or professional students to cover the cost of advanced degrees. The OBBBA eliminates Grad PLUS Loans for new borrowers starting July 1, 2026. Current borrowers are grandfathered in, meaning they can continue borrowing under existing rules until their program ends. This change pushes future graduate students toward other loan types or private financing.
  • Federal Graduate Loan Caps: For professional degrees (e.g., law, medicine, dental), borrowing is capped at $50,000 per year and $200,000 lifetime. For other graduate degrees (e.g., history, philosophy), the limits are $20,500 per year and $100,000 lifetime. These caps apply to federal loans and aim to prevent students from accumulating unmanageable debt in fields with varying earning potential.
  • Undergraduate Loan Caps: Undergraduate students face a $20,500 annual limit and a $100,000 lifetime cap on federal loans. These limits encourage students to plan carefully and seek alternative funding, like work-study programs or grants, to cover college costs.
  • Loan Types (Subsidized vs. Unsubsidized): Starting in 2026, all new graduate borrowing must use Direct Unsubsidized Loans, where interest starts accruing immediately upon borrowing, regardless of financial need. In contrast, Direct Subsidized Loans (still available for undergraduates with financial need) defer interest until six months after graduation. This shift for graduate students means higher costs over time, as interest accumulates during school.
  • Deferment Changes: Deferment allows borrowers to pause loan payments without interest accruing (for subsidized loans) or with interest accruing (for unsubsidized loans). The OBBBA eliminates deferments for economic hardship (e.g., job loss) and unemployment starting July 1, 2026. Forbearance—another way to pause payments, where interest always accrues—remains available but with stricter time limits. This change means borrowers facing financial challenges will have fewer options to delay payments.
  • Income-Driven Repayment (IDR): IDR plans adjust monthly loan payments based on income and family size, making them more affordable for borrowers with lower earnings. The OBBBA simplifies the complex array of IDR plans (like SAVE, PAYE, REPAYE, IBR) into a single, streamlined option for new borrowers after July 1, 2026. Current IDR borrowers are grandfathered until 2028, then must switch to the new IDR plan or a standard repayment plan (fixed payments over a set term). The new IDR plan ties payments to a percentage of discretionary income, with repayment terms based on the loan balance at enrollment.

These changes push students and parents to borrow wisely and plan for repayment early. Psalm 37:21 warns, “The wicked borrows but does not pay back, but the righteous is generous and gives.” As stewards, we want to teach our kids to approach debt with caution, choosing educational paths that align with their goals and financial realities. The OBBBA’s reforms may limit flexibility, but they also protect against crushing debt that could hinder their future.

Action Step: Talk to your kids about the true cost of college, including interest on loans. Use online loan calculators to estimate payments under the new caps, and explore scholarships, grants, or part-time work to reduce borrowing. Pray for discernment in choosing affordable educational paths and consider having an honest conversation with your child about the importance of choosing a degree with a strong return on investment.

5. Medicaid and SNAP Benefits

Finally, the OBBBA addresses government benefits like Medicaid and SNAP, but it’s a sensitive topic. 

The bill limits these benefits to U.S. citizens, which means children of illegal immigrants may lose access. This isn’t about targeting kids—nobody wants children to go hungry—but it reflects a broader effort to address national debt and prioritize legal residents. As stewards, we’re called to balance compassion with responsibility.

Matthew 22:21 says, “Render to Caesar the things that are Caesar’s, and to God the things that are God’s.” This verse reminds us to respect governing authorities while keeping our hearts aligned with God’s call to care for the vulnerable. The OBBBA’s changes almost for certain will spark debate, but the premise of this bill is to highlight the importance of legal immigration and fiscal responsibility, along with caring for those that are legal citizens of the United States. For more on Medicaid spending, check out a couple of episodes ago, # 256, for we speak more in depth of this there.

Action Step: If your family relies on these benefits, verify your eligibility under the new rules. For those unaffected, consider supporting local Christian charities (or National ones) that directly help kids in need.  By doing that, you are clearly living out the Word of God…and also reflecting God’s heart for the least of these (Matthew 25:40).

Final Thoughts

The OBBBA is far-reaching and complex. While many of the changes aim to benefit American families, others introduce uncertainty and trade-offs. As with any major policy shift, the details matter—and many of them are still unfolding.

If you’re a parent, grandparent, or guardian, it’s crucial to stay informed. Work with a trusted financial professional to understand how this legislation may affect your planning for education, healthcare, and long-term savings for the next generation.

 

 

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