The One Big Beautiful Bill Act (OBBBA) of 2025 made significant changes to federal student aid. Some provisions were established directly in law, while others still require final regulations and implementation guidance from the U.S. Department of Education (ED). Many updates take effect beginning July 1, 2026, and apply to the 2026-27 FAFSA form and academic year.
What changes under the One Big Beautiful Bill Act?
OBBBA introduces changes to how families will pay for college based whether they are current borrowers or new borrowers. Your borrower status will determine which rules and loan limits apply, as well as the amount of Federal Aid that you may be eligible to receive moving forward. Some students and families may need to explore additional financing options, including private loans, to help cover remaining tuition, fees, and out-of-pocket costs.
Some of the key changes include the following:
- Graduate PLUS Loan program eliminated
- Parent PLUS annual and aggregate loan limits
- Graduate and Professional loan limits
- Federal Loan Program lifetime limits
- Loan reduction for students below full-time
- Student loan repayment programs limited
- Cost of attendance impacts on the Federal Pell Grant
Loans for Graduate Students
Graduate PLUS loans are eliminated for new borrowers starting July 1, 2026.
New Graduate Unsubsidized Loan Limits
Beginning July 1, 2026, new federal borrowing limits apply to Federal Direct Unsubsidized Loans for graduate students.
- Annual Graduate Direct Unsub Loan limit: $20,500
- Lifetime Graduate Direct Unsub Loan limit: $100,000
Federal loan legacy provisions may apply, see below.
Borrowing Beyond Federal Limits
Graduate students who reach their annual federal unsubsidized loan limit and still have remaining educational costs may consider applying for a private (alternative) student loan. Please note that private loans often include mandatory waiting periods and credit requirements, so you are encouraged to apply early if pursuing this option.
Undergraduate Student and Parent PLUS Borrowing Loan Limits
Beginning July 1, 2026, Parent PLUS loans are subject to new limits:
- Annual Parent PLUS Loan limit: $20,000 per dependent student
- Lifetime Parent PLUS Loan limit: $65,000 per dependent student
(combined across all parents)
Federal loan legacy provisions may apply, see below.
Federal Loan Legacy Provisions
Some students with federal loans disbursed before July 1, 2026, may be exempt and qualify for limited continuation under prior borrowing rules (legacy provisions). Final eligibility details depend on pending final regulatory guidance. The following legacy provisions are as follows:
- If you (or a parent on your behalf) borrowed a federal loan prior to July 1, 2026, and are continuing under the same academic program, your loan eligibility will continue to be reviewed under the previous loan rules.
- Legacy provisions are in effect for a maximum of three years or completion of your degree (lesser of the two) for the academic program in which you were enrolled prior to July 1, 2026.
- If at any point during the three year period that you meet legacy provisions, you withdraw from school or change degree programs/major, you can no longer qualify under legacy provisions.
- Students who qualify under legacy provisions cannot be considered under the new loan rules beginning July 1, 2026.
Enrollment-Based Loan Schedule of Reduction
Beginning with the 2026–27 academic year, federal student loan limits will be based on how many credits you take across the academic year.
In the past, students enrolled at least half-time could often receive the full annual loan limit. Starting in 2026-27, loan eligibility will be adjusted based on your enrollment level.
What this means for you:
- Full-time students (based on both each semester and overall academic year enrollment) may qualify for the full annual loan amount
- Part-time students will qualify for a reduced loan amount based on their enrollment
- Changes to enrollment, even from one semester to the next, may affect your loan eligibility for the entire academic year
- Changes of enrollment include but are not limited to:
- Dropping a class
- Withdrawing from a class
- Receiving a non-passing grade ("I"ncomplete or "F"ail)
- Changes of enrollment include but are not limited to:
Important to Know!
Enrollment for student loan eligibility is now reviewed across the full academic year. For example, if you reduce your credits in the fall, it may lower the total loan amount you are eligible to receive, including what is available for the spring term.
Loan Repayment
Federal student loan repayment options are being restructured. Specific repayment plan details, payment calculations, and implementation timelines depend on final federal regulations, which have not yet been published.
Federal Pell Grant Updates
Pell Grant Ineligibility Based on SAI
Students whose Student Aid Index (SAI) is at or above twice the maximum Pell Grant for the award year are ineligible for the Federal Pell Grant.
Full Cost Scholarship Pell Ineligibility
Students whose total non-federal grants and scholarships are at or above their estimated cost of attendance are ineligible for the Federal Pell Grant. Final implementation details depend on pending final regulatory guidance.
FAFSA Form Updates
FAFSA and the Student Aid Index (SAI)
Starting with the 2026-27 FAFSA, certain assets are excluded from the Student Aid Index calculation and should not be reported as FAFSA assets:
- Family-owned businesses with 100 or fewer full-time equivalent (FTE) employees
- Family farms on which the family resides
- Family-owned commercial fishing businesses (and related expenses), owned and controlled by the family
Review FAFSA instructions to clarify asset reporting requirements.
Planning for Federal Student Aid Updates
Students and families can prepare for these updates by:
- Continuing to file the FAFSA every year. The priority deadline is May 1.
- Completing verification process (if selected) by June 1 (extended for 2026-27 to July 1).
- Reviewing federal loan borrowing options if planning to attend graduate school.
- Understanding FAFSA asset reporting rules, particularly for families who own small businesses, farms, or commercial fishing operations.
For additional information and ongoing federal updates, visit the Federal Student Aid website.