Federal Student Aid Changes

The One Big Beautiful Bill Act (H.R.1), signed into law on July 4, 2025, enacts changes for Federal Student Aid. These changes will be effective for the 2026-2027 academic year and do not impact the current 2025-2026 academic year. Changes include new loan limits, elimination of the Federal Graduate PLUS Loan, and loan proration for students enrolled less than full-time. 

Graduate PLUS Loan Program

This program is ending on July 1, 2026 and will no longer enroll new borrowers.

Current borrowers can continue their current program under the old loan limits until the completion of the program, or three academic years, whichever is first. Current borrowers are defined as those who have borrowed at least one Graduate PLUS loan or Direct Unsubidized loan prior to July 1, 2026.

Parent PLUS Loan Annual & Aggregate Limit

Eligible parents can borrow up to $20,000 per student per year, with a maximum lifetime limit of $65,000.

If a borrower has a Parent PLUS loan made before July 1, 2026, the parent can continue to borrow under current loan limits for three academic years or the remainder of their dependent student's expected time to credential, whichever is less while the dependent student is enrolled in a credentialed program.

Graduate & Professional Annual & Aggregate Loan Limits

The loans are limited to $20,500 for graduate students and $50,000 for professional students. The aggregate limit is $100,000 for graduate students and $200,000 for professional students and does not include amounts borrowed as a undergraduate. Borrowers who are both graduate and professional students at to some point in their educational careers may only borrow up to $200,000 in total for graduate and professional school.

If a borrower has a Direct Unsubsidized Loan made for July 1, 2026, while enrolled in a credentialed program, the borrower can continue to borrow under current loan limits for three academic years or the remainder of their expected time to credential, whichever is less. 

Federal Loan Program Lifetime Loan Limits

All federal student loans excluding borrowed Parent PLUS loan amounts (in the case of a dependent student who had Parent PLUS borrowed on their behalf for education expenses) have a lifetime borrowing limit of $257,500. 

If a borrower has a Federal Direct Loan made before July 1, 2026, the borrower can continue to borrow under current loan limits for three academic years or the remainder of their expected time to credential, whichever is less while enrolled in a credential program. 

Loan Amount Reductions for Less Than Full-Time Enrollment

Students enrolled less than full-time will have their federal loans prorated to match their enrollment. This applies to students enrolled in undergraduate, graduate, and professional degree programs who borrow any type of Federal Direct Student Loan and are not enrolled full-time. 

For example, an undergraduate student who is enrolled in six credit hours in Fall semster and six credit hours in Spring semester is enrolled 50% each term. Their federal student loans will be prorated to 50% of their annual eligibility. If the student is eligibe for $7,500 ($3,750 per term) at full-time for the two semesters combined, then their prorated amount will be reduced to $3,750 ($1,875 per term) to reflect their half-time enrollment. Graduate/professional federal student loans will require reduction for less than nine credit hours per semester. 

This provision did not an effective date, but the U.S. Department of Education announced on July 18, 2025 in Dear Colleague Letter GEN-25-04 that it is currently developing the schedule of loan reductions required by proration and will submit the schedule for public comment later this year. One the revised schedule of reductions is issued, schools must use it for students enrolled less than full-time during academic years 2026-2027 and beyond. 

Federal Pell Grant

Students who recieve grants or scholarships from non-federal sources covering their entire cost of attendance (COA) are ineligible to receive a Pell Grant, even if otherwise eligible for the program.