Federal Loan Updates for 2026-2027
Federal Student Loan changes for 2026–27
Financial aid impact under federal legislation: One Big Beautiful Bill Act
This information reflects the most current guidance available for the One Big Beautiful Bill Act and is subject to change.
The One Big Beautiful Bill Act (OB3 or OBBBA) was enacted into law on July 4, 2025, through the federal budget reconciliation process. This legislation contains major changes that significantly reshape federal student aid across the country.
What changed under the One Big Beautiful Bill Act?
Federal Loan Program changes
Schedule of Reduction for Loans: Beginning the 2026-2027 academic year, all unsubsidized and subsidized annual loan amounts will be reduced based on enrollment status for those enrolled less than full time. Borrowers鈥痚nrolled in鈥痩ess than full time鈥痺ill only be able to borrow loan amounts in direct proportion to their credit load, with a minimum half-time enrollment requirement.
Changes to the following Federal Student Loan Programs will be effective July 1, 2026:
- Graduate PLUS Loan Program eliminated
- Parent PLUS annual and loan limits
- Graduate/Professional annual and aggregate loan limits
- Federal Loan Program lifetime limits
- Loan Reduction for students below full-time
Federal Pell Grant Eligibility changes
The following Pell changes take effect beginning July 1, 2026:
- Students meeting or exceeding their full鈥疌ost of Attendance鈥痺ith scholarship/waiver aid will鈥痭ot鈥痓e eligible for any amount of Pell Grant.
- This change will affect student-athletes on full-ride scholarships, as well as other students whose institutional, state, and/or private aid meet or exceed full COA.
- This is a change from previous regulations, which allowed students in some circumstances to be fully funded with scholarship aid and still received their Federal Pell Grant on top.
- Students with an SAI equal to or greater than 14,790 (twice the maximum Pell Grant which is $7,395) are ineligible to receive a Pell Grant.
- Certain Assets Excluded: Family businesses (≤100 employees), family farms, and commercial fishing operation assets will be excluded in SAI calculation.
- Foreign Income Included: Income from foreign sources will be added to adjusted gross income (AGI).
Overview based on student type
This information below provides an overview of key changes and explains the impact to students and families by student type.
Incoming Freshman / Transfer undergraduate students
- Incoming Fall 2026 freshmen and transfer students will fall completely under the new federal policy.
- Loans: Incoming and transfer students will adhere to the new Federal Direct Loan limits as shown in the table below.
- Lifetime limits listed below exclude Parent PLUS.
| Year in School | Dependent Students | Independent Students |
|---|---|---|
| First-Year Undergraduate Annual Loan Limit: |
$5,500 No more than $3,500 of this amount may be in subsidized loans |
$9,500 No more than $3,500 of this amount may be in subsidized loans |
| Second-Year Undergraduate Annual Loan Limit: |
$6,500 No more than $4,500 of this amount may be in subsidized loans |
$10,500 No more than $4,500 of this amount may be in subsidized loans |
| Third-Year and Beyond Undergraduate Annual Loan Limit: |
$7,500 No more than $5,500 of this amount may be in subsidized loans |
$12,500 No more than $5,500 of this amount may be in subsidized loans |
Aggregate and Lifetime Loan Limits
| Loan Limits | Dependent Students | Independent Students |
|---|---|---|
| Subsidized and Unsubsidized Aggregate Loan Limit: | $31,000 No more than $23,000 of this amount may be in subsidized loans |
$57,500 No more than $23,000 of this amount may be in subsidized loans |
| Lifetime Loan Limit: | $257,500 | $257,500 |
Parent PLUS Loans: will be subject to new annual and aggregate borrowing limits per dependent student. These limits apply regardless of prior loan forgiveness, repayment, cancellation, or discharge.
Parents (combined) may borrow:
- $20,000 per year鈥痯er dependent student
- $65,000 aggregate limit鈥痯er dependent student
Schedule of Reduction for Loans: Beginning the 2026–2027 academic year, all unsubsidized and subsidized annual loan amounts will be reduced based on enrollment status for those enrolled less than full time. Borrowers鈥痚nrolled in鈥痩ess than full time鈥痺ill only be able to borrow loan amounts in direct proportion to their credit load, with a minimum half-time enrollment requirement.
Current undergraduate students
What’s changing:
Schedule of Reduction for Loans: Beginning the 2026–2027 academic year, all unsubsidized and subsidized annual loan amounts will be reduced based on enrollment status for those enrolled less than full time. Borrowers鈥痚nrolled in鈥痩ess than full time鈥痺ill only be able to borrow loan amounts in direct proportion to their credit load, with a minimum half-time enrollment requirement.
Parent PLUS Loans: New Borrowers will be subject to new annual and aggregate borrowing limits per dependent student. These limits apply regardless of prior loan forgiveness, repayment, cancellation, or discharge.
Parents (combined) may borrow:
- $20,000 per year鈥痯er dependent student
- $65,000 aggregate limit鈥痯er dependent student
Legacy Provision for Active Parent Plus Loan Borrowers:鈥疘f the student or parent borrower received a Federal Direct Loan before July 1, 2026, while the dependent student was enrolled in a program of study, Parent PLUS borrowing may continue under current loan limits for up to three academic years or the remainder of the student’s expected time to credential, whichever is less.
What’s staying the same:
Many students currently enrolled as of Spring and Summer 2026, who have previously borrowed federal direct loans under their current program will fall under the legacy provisions.
Legacy Provisions:
Allows current students or parents to temporarily continue to borrow under the prior federal loan rules and loan limits for 3 academic years or the remainder of their expected time to credential, whichever is less.
- 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
Legacy Provisions qualifications:
- A Federal Direct Loan is disbursed on or before June 30, 2026.
- Undergraduates may change majors if they remain at the undergraduate level.
- There is no withdrawal or break in enrollment.
If you鈥痙o not鈥痲ualify for the legacy provisions, please see the Incoming Freshmen/Transfer undergraduate students section for more information about the changes to federal financial aid.鈥�
Incoming graduate students
You are starting a graduate program in the Fall of 2026 or later.
Incoming Fall 2026 graduate degree students will fall under the new policy:
- The Graduate PLUS loan is no longer available.
- The new loan limit is $20,500 annually with a program limit of $100,000. The program limit does not include undergraduate loans. The lifetime federal loan limit is $257,500 which does not include undergraduate Parent PLUS loans.
| Program Type | Annual Limit | Aggregate Limit | Lifetime Maximum |
|---|---|---|---|
| Graduate: | $20,500 | $100,000 | $257,500 (all undergrad, grad, and professional) |
Schedule of Reduction for Loans: Beginning the 2026–2027 academic year, all unsubsidized annual loan amounts will be reduced based on enrollment status for those enrolled less than full time. Borrowers鈥痚nrolled in鈥痩ess than full time鈥痺ill only be able to borrow loan amounts in direct proportion to their credit load, with a minimum half-time enrollment requirement.
Current graduate students
What’s changing:
Current Graduate Students will follow the New Annual, Aggregate, and Lifetime Toal Loan Limits
The new loan limit is $20,500 annually with a program limit of $100,000. The program limit does not include undergraduate loans. The lifetime federal loan limit is $257,500 which includes the Graduate Plus Loan but not undergraduate Parent PLUS loans.
| Program Type | Annual Limit | Aggregate Limit | Lifetime Maximum |
|---|---|---|---|
| Graduate: | $20,500 | $100,000 | $257,500 (all undergrad, grad, and professional) |
Graduate PLUS loans are no longer available starting July 1, 2026.
You may continue borrowing Graduate PLUS loans under prior limits for up to 3 academic years (or the remainder of your academic program, whichever is less) if you meet the criteria below:
- Are enrolled as of June 30, 2026, and
- Previously borrowed a federal loan for your academic program, and
- Remain in the same academic program through graduation
Schedule of Reduction for Loans: Beginning the 2026–2027 academic year, all unsubsidized annual loan amounts will be reduced based on enrollment status for those enrolled less than full time. Borrowers鈥痚nrolled in鈥痩ess than full time鈥痺ill only be able to borrow loan amounts in direct proportion to their credit load, with a minimum half-time enrollment requirement.
What’s staying the same:
Many graduate students currently enrolled as of Spring and Summer 2026, who have previously borrowed federal direct loans under their current program will fall under the legacy provisions.
Legacy Provisions: Allows for continuing students to temporarily continue to borrow under the prior federal loan rules.鈥疭tudents who qualify for legacy provisions may continue using Graduate PLUS loans and the prior federal loan limits.鈥疶he student can continue to borrow under the current loan limits for 3 academic years or the remainder of their expected time to credential, whichever is less. Legacy eligibility is determined by federal law and is automatically applied if a student qualifies. It cannot be waived or declined.
Legacy Provision qualifications:
- A Federal Direct Loan鈥痠s鈥痙isbursed鈥痮n or before鈥疛une 30, 2026.
- The student must remain in the鈥痵ame program at the same school.
- There is鈥痭o withdrawal or break in enrollment.
Have questions?
Learn more about common questions regarding the One Big Beautiful Bill Act on our FAQ page.
Page last updated 3:04 PM, June 11, 2026