Federal student aid changes (Effective July 1, 2026)
What you need to know
The One Big Beautiful Bill Act (OBBBA) was signed on July 4, 2025, and includes significant reform to Federal Student Aid programs. These changes may affect how much you can borrow and which federal loan programs are available to you.
You should review this information if you:
- Receive Title IV (TIV) Federal Aid (Federal Pell Grant and/or Federal Direct Loans)
- Plan to start a graduate or professional program in the 2026–2027 academic year
- Are continuing in the same graduate or professional program and borrowed federal loans before July 1, 2026
- Plan to change academic programs or institutions
- Expect to rely on graduate Direct PLUS Loans to cover educational costs
- Are an undergraduate student whose parent borrowers Parent PLUS loans
What Is Changing on July 1, 2026
The new law introduces several key structural changes to the federal loan landscape and the Pell Grant:
Less-Than-Full-Time Loan Reduction: The University will be required to adjust the annual loan limit for borrowers enrolled less-than-full-time.
Elimination of Graduate Direct PLUS Loans: Starting July 1, 2026, the Graduate Direct PLUS Loan program will be eliminated for new graduate and professional student borrowers.
New Borrowing Limits: The act establishes updated annual, aggregate and lifetime borrowing limits.
Parent PLUS: Changes include new annual and aggregate parent PLUS Loan limits for new borrowers.
Legacy Provisions: Some students may still qualify for previous loan structures under a limited legacy provision, provided they meet specific eligibility requirements.
Federal Pell Grant Eligibility: Students are ineligible for Pell if their cost of attendance is fully covered by non-federal sources or if their Student Aid Index (SAI) is over twice the maximum Pell Grant.
Less-Than-Full-Time Loan Reduction
Prior to the 2026–2027 award year, you may have been eligible for the maximum annual loan limit for your academic year. Effective July 1, 2026, your loan eligibility will be determined in part by your enrollment status. Students enrolled less-than-full-time will have their loan eligibility reduced proportionally to their level of enrollment.
Graduate Plus Loan Changes
The graduate Direct PLUS Loan program will no longer be available to new graduate and professional student borrowers beginning July 1, 2026.
Legacy Provision
The law allows some students to continue borrowing under the existing loan limits for the Graduate Direct PLUS loan program and the Parent PLUS loan program for a limited period of time. To determine eligibility for legacy loan limits, the Department of Education requires institutions to calculate a student's Estimated Time to Completion (ETTC), capped at three years. Consequently, the legacy loan period will not exceed either three years or the calculated ETTC.
Students may qualify for the legacy provision if they:
- Remain continuously enrolled in the same credential level program at the same institution as they were enrolled as of June 30, 2026, AND
- Received a Federal Direct Loan disbursement (unsubsidized or graduate PLUS) for that same program before July 1, 2026.
Time to Credential
The following methodology is established to ensure a standardized calculation of the "Expected Time to Credential" for determining loan limit exception eligibility for legacy students:
Program Length - Time of Study Already Completed by Student = Expected Time to Credential
Please note: This guidance is exclusively for establishing the "Time to Credential" within the scope of OBBBA requirements. This framework does recognize students who enroll part-time and may not follow course sequencing.
Unsubsidized Direct Loan Limits Beginning July 1, 2026
New annual and aggregate Direct Unsubsidized Loan limits apply to graduate and professional students who do not qualify for the legacy provision.
Graduate students
Annual limit: $20,500
Aggregate limit (per program): $100,000
Professional students
Annual limit: $50,000
Aggregate limit (per program): $200,000
Please note: These limits do not include amounts borrowed as an undergraduate. Students who are both graduate and professional students at different points in their education may borrow a combined maximum of $200,000 for graduate and professional study. Students are also now limited to a lifetime Federal loan limit of $257,500. This loan limit includes all Federal Direct Loans (Subsidized, Unsubsidized and Grad PLUS).
Parent Plus Loan Changes
Effective July 1, 2026, new annual and aggregate limits will apply to parent PLUS Loans.
Annual limit: $20,000 per dependent student
Aggregate limit: $65,000 per dependent student
Please note: The limit is applied per student, not per parent borrower.
Legacy Provision
For parent PLUS Loan borrowers to continue borrowing parent PLUS Loans under the previous loan limits instead of the new loan limits, a student must remain continuously enrolled in the same program of study at the same institution as they were enrolled as of June 30, 2026, AND either:
- The parent borrower must have had a parent PLUS Loan disbursed for that same program before July 1, 2026, OR
- The student must have had a Direct Loan (subsidized or unsubsidized) disbursed for that same program before July 1, 2026.
If the above requirements are met, the new parent PLUS Loan limits do not apply while the student is completing their program, for up to the earlier of three academic years or the student’s time to credential, provided the student remains continuously enrolled.
Federal Pell Grant Eligibility
Students who receive grants or scholarships from non-federal sources (institutional, state, or private) that cover their entire cost of attendance (COA) are ineligible to receive a Pell Grant, even if otherwise eligible.
Students are ineligible for a Pell Grant if their SAI exceeds twice the maximum Pell Grant award. Students with an SAI equal to or greater than 14,790 (twice the maximum Pell Grant) are ineligible to receive a Pell Grant.