One Big Beautiful Bill Act

The One Big Beautiful Act (OBBBA) was signed into law on July 4, 2025 and made significant changes to federal financial aid programs, including new loan limits, new loan repayment options, and updated eligibility requirements, for both current and future students.

These are the changes that took effect July 1, 2026, for the 2026-27 academic year.
The information on this page reflects the current understanding of the OBBBA and implementing regulations issued by the U.S. Department of Education, as of July 2026.

Current Undergraduate Student

  • What's Staying the Same?

    Undergraduate Annual Loan Limits

    No Change: Subsidized and Unsubsidized loan limits remain the same

    • Annual: $5,500-$12,500 (based on year and dependency status)
    • Total: $31,000 (dependent) or $57,500 (independent)
    • U.S. Department of Education: Loan Amount Limits
  • What's Changing?

    Reduced Annual Loan Limits for Part-Time Enrollment

    Limited loan eligibility: If you enroll in less than 12 credit hours (undergraduate students) or 9 credit hours (graduate/doctoral students) in a semester, the amount you can borrow for the semester may be reduced depending on the timeline from when disbursement occurs. This requirement is called the Direct Loan Schedule of Reductions (SOR).

  • What is Schedule of Reduction (SOR)?
    Schedule of Reductions (SOR) is a formula in federal regulations that lowers the amount of Direct Loan funds a student can borrow when they attend less than full-time during an academic year.

  • Parent PLUS Loan Limits

    New limits Updated annual and lifetime borrowing limits apply to Parent PLUS loans - limits are per student, not per parent borrower

    • Annual: up to $20,000 per year per student
    • Total: $65,000 per student

    Action: If you do not qualify for an exception and your parent(s) plan to borrow more than new limits, consider alternative/private education loan options

    Exception for Current Students (a.k.a. "legacy" or "grandfather" provisions):

    Most current students qualify for an exception: If you qualify, new Parent PLUS limits don't apply for up to three academic years

    Your parent(s) may continue borrowing Parent PLUS loans under prior limits for up to 3 academic years (or the remainder of your academic program, whichever is less) if -

    • you are enrolled as of June 30, 2026, and
    • you or your parent(s) borrowed a federal loan for your academic program prior to July 1, 2026, and
    • you remain in the same academic program through graduation

    Key Details: If you take a leave of absence or withdraw from your academic program at any point after July 1, 2026 – for any reason – you will permanently lose eligibility for the legacy exception, even if you later re-enroll in the same program.

    Additionally, the OBBBA does not provide exceptions for reduced annual loan limits for part-time enrollment or updated Pell Grant eligibility provisions – both are effective July 1, 2026 for the 2026-27 academic year.

  • Pell Grant Eligibility

    Updated eligibility criteria: Certain types of income/assets are either included or excluded for some students, and new eligibility limitations apply

    • Student Aid Index (SAI) limitation: Students with SAI ≥ $14,790 (2x the current maximum Pell award) will no longer qualify for Pell Grants.
    • Other grants and scholarships limitation: Students with total grants and scholarships from non-federal sources that exceed the total estimated Cost of Attendance (COA) will no longer be eligible for Pell Grant.

Current graduate Student

  • What's Staying the Same?

    Graduate/Doctoral students may continue to receive up to $20,500 in unsubsidized loans each year at a full-time enrollment status.

  • What's Changing?
    • It’s no longer possible for you to receive a Direct PLUS Loan for graduate or professional students (i.e., a grad PLUS loan).
    • If you’re enrolled less than full time, then your annual loan limit will be adjusted based on your enrollment status.

    • You may receive up to $100,000 total in unsubsidized loans. This aggregate loan limit doesn’t include loans received for undergraduate study, but it includes all Direct Subsidized Loans and Direct Unsubsidized Loans made for graduate study.

    • You have a lifetime maximum loan limit of $257,500, which includes the total amount disbursed on all subsidized loans and unsubsidized loans you’ve received as an undergraduate, graduate, and professional student and includes any grad PLUS loans that you received prior to entering your current program. You can’t borrow more than the lifetime maximum loan limit, even if you pay off or receive a discharge on any amount of your loans.

      Some borrowers may qualify for what’s called an “interim exception” regarding when some of the new loan limits will apply. 

  • What is interim exception?
    The interim exception lets certain current graduate students keep the existing federal loan rules, including Grad PLUS eligibility and current borrowing limits, through June 30, 2029, instead of being subject to the new loan limits that began as of July 1, 2026.
  • How would I qualify for interim exception?

    If a student qualifies for the interim exception, they can continue using the current federal loan rules through the 2028-29 award year (June 30, 2029), instead of having the new loan limits apply immediately as of July 1, 2026.

    Students who qualify for interim exception can:

    • Continue borrowing under the current aggregate loan limit of $138,500 through 2028-29.
    • Continue to be eligible for Grad PLUS Loans through 2028-29 (assuming they meet credit requirements).
    • Avoid the new lifetime loan limit of $257,500 until the exception ends.
    • Delay the impact of the new loan limits until July 1, 2029, unless they lose eligibility sooner.

    Students who do not qualify for interim exception will have the new rules apply starting July 1, 2026 as follows:

    • No new Grad PLUS Loans.
    • New graduate borrowing limits apply.
    • A lifetime federal student loan limit of $257,500 applies.
    • Graduate students may have lower aggregate unsubsidized loan limits depending on their program history.

    Please note:

    A student who qualifies for the interim exception may lose it if they take certain actions that impact their program status. If a student loses the exception, the new loan limits apply immediately.