Federal Updates

The One Big Beautiful Bill Act (OBBBA) and financial aid

Only July 4, 2025 the One Big Beautiful Bill Act (OBBBA) was signed into law, introducing significant changes to federal student aid programs. The OBBBA introduces changes to financial aid that may affect all students including changes to PELL eligibility calculation, repayment plans, and revised loan options — As of the development of this webpage, these changes are scheduled to go into effect July 1, 2026, and/or with the 2026-27 FAFSA. 

Disclaimer: The Department of Education has not yet finalized or released final rules regarding OBBBA to universities or financial aid offices. This information is based on our good faith understanding of the evolving federal regulations. However, it is not official guidance and should not be regarded by students and families as definitive. The Student Financial Services Office is available to help students identify alternative sources of funding for their education.

Changes to Federal Loans Programs:

Graduate Students

Federal Direct Unsubsidized Loans: New Loan Borrowers- Graduate Students entering their degree after July 1, 2026 

New graduate borrowers who first borrow federal graduate-level loans on or after July 1, 2026, for a graduate academic program will be considered NEW borrowers. These borrowers will be subject to the newly established loan limits:

• New Loan Limits- $20,500 per year for graduate students, with an aggregate limit of $100,000
• Lifetime borrowing (across undergraduate and graduate education) is capped at $257,500 on all federal student loans (except Parent PLUS)

Graduate PLUS Loans

• Graduate PLUS Loans eliminated and will not be available for new borrowers effective July 1, 2026

Current Graduate Student Borrowers—Legacy Eligibility

Current graduate borrowers include those who borrowed federal graduate-level loans, before July 1, 2026, and remain enrolled in the same program at the same institution. These students may continue to borrow under the current loan rules (Graduate PLUS and Unsubsidized Loans) for 3 academic years or the remainder of their program, whichever is less.

Undergraduate Students

Parent PLUS Loans- New Borrowers

• Parent PLUS Loan will be capped at $20,000 per year per dependent student, with a $65,000 aggregate limit per student (without regard to amounts forgiven, repaid, canceled or discharged)
  • Example of borrowing the maximum $20,000/year:
    • Year 1: $20,000
    • Year 2: $20,000
    • Year 3: $20,000
    • Year 4: Only $5,000 remains within the $65,000 lifetime

Parent PLUS Loans– Legacy Eligibility Based on Prior Borrowing for Each Specific Dependent Student

Students or parents who have borrowed a Federal Direct loan before July 1, 2026 will have a legacy provision, that allows them to borrow based on previous loan limits, for up to 3 academic years or the end of the dependent student's academic program, whichever is less.

• Legacy provisions for Parent PLUS borrowers are specific to each student*, who must have been enrolled for a program of study before July 1, 2026
• If the student ceases enrollment or withdraws from the university and does not re-enroll in their program of study before June 30, 2026, the legacy status no longer applies, and the new limits take effect immediately

*Legacy provisions do not apply to other dependent students

Loan Proration

• Institutions must prorate annual loan eligibility based on a student’s enrollment
• If a student is enrolled half-time, they would only be eligible for half of their annual loan eligibility
• We are awaiting clarification from ED on how this will be applied to both graduate and undergraduate students

Federal Loan Repayment

• Federal Direct loans with a first disbursement date on or after July 1, 2026, will be eligible for 2 repayment plans: a restructured Standard repayment plan with a repayment period ranging from 10 to 25 years, or a new income-driven Repayment Assistance Plan (RAP) with a 30-year repayment period
• Borrowers with no new loans made on or after July 1, 2026, can continue to be eligible to enroll in the current Standard, current Income Based (IBR), Graduated, and Extended repayment plans, and could also opt in to the new RAP. Current borrowers enrolled in ICR, PAYE, or SAVE plans must transition to a new repayment plan by July 1, 2028. If no selection is made by that date, they will be moved into RAP

Resources

• NASFAA: View Breakdown of Changes from the National Association of Student Financial Aid Administrators
• Federal student aid:   https://studentaid.gov/announcements-events/big-updates