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One Big Beautiful Bill Act (OBBBA): 2026-27 Changes to Federal Financial Aid

Last revised 5/18/2026

The federal government passed a major bill called the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025. It includes significant updates to federal financial aid programs, especially student loans, that will affect students beginning in the 2026-27 academic year. Most of these changes go into effect on July 1, 2026. This information reflects the most current guidance available and is subject to change as we receive Final Rules and additional guidance in the coming months. Please contact our office with any questions regarding your financial aid.

Quick Summary 

    Topic                             Major Change

Changes That Affect All Students

Federal Lifetime Loan Limit

There is now a lifetime cap of $257,500 on total federal student loans (excluding Parent PLUS loans). This includes all loans borrowed for undergraduate and graduate education combined.

Loan Proration

Starting July 1, 2026, federal student loans will be prorated based on a student’s enrollment, similar to how federal Pell grant is currently disbursed based on enrollment intensity. Under this change:

  • Students enrolled less than full-time will be eligible to borrow loan amounts proportional to their course load.
  • To qualify for a federal loan, a student must be enrolled at least half-time (6 credits or more for undergraduates, 5 graduate/professional credits or more for graduate/professional students).

Example: A student enrolled half-time will be eligible for approximately half of the standard loan amount for the term.

Additional guidance from the U.S. Department of Education on the exact proration calculations is still forthcoming.

Undergraduates

Pell Grant Eligibility Updates

Some changes affect who can receive Pell Grants:

  • If your Student Aid Index (SAI) exceeds twice the maximum Pell amount -- using the Pell Grant maximum for 2026-27 of $7,395, this means an SAI greater than $14,790 will not be eligible for Pell Grant.
  • Students with non-federal aid (scholarship/waiver) that covers or exceeds the full cost of attendance as determined by the Financial Aid Office will not be eligible for any Pell Grant.

Loan Limits

  • Undergraduate annual loan limits remain the same for the 2026-27 school year.
  • However, all loans count toward the new lifetime cap of $257,500, excluding Parent PLUS loans.

Parent PLUS Loans

  • Parents can borrow up to $20,000 per year per dependent student and $65,000 lifetime total for each dependent. This is a change from current rules, where borrowing was up to the full cost of attendance less other aid received.
  • If a parent took a PLUS loan before July 1, 2026, they may be able to continue under the old limits for up to three academic years or until the student’s current program is completed.

Interim Loan Limit Exception (Legacy Provisions for Undergraduates)

Undergraduate Students and Parent PLUS Borrowers
You qualify as an eligible undergraduate student under the limited exception to allow your parent to receive a Direct PLUS Loan for parents if you

  • were enrolled in a program of study at an institution as of June 30, 2026 ;
  • received at least one Direct Loan, or your parent received a Direct PLUS Loan on your behalf, for such program of study, before July 1, 2026; and
  • are enrolled at the same institution and are seeking the same credential after July 1, 2026, and have not ceased to be enrolled seeking the same credential at the same institution at any point on or after July 1, 2026 ("enrolled" means registered for Fall 2026 classes as of June 30, 2026).

“Credential” refers to the degree you’re seeking, for example, a bachelor’s or associate degree. You can’t change credential level and maintain eligibility for the exception, but you can change majors within your credential.

Graduate and Professional Students

Graduate PLUS Loans

  • Graduate PLUS loans will no longer be available for new borrowers starting July 1, 2026.
  • If you borrow a federal Direct Loan before July 1, 2026, for an eligible graduate/professional program, you may qualify for the Legacy provision and be allowed to continue borrowing under the old rules (including continuing to be eligible for Graduate PLUS loans) for up to the lesser of three academic years or the difference between program length in which the student is enrolled and the period that the student has completed as of July 1, 2026.
  • Additional guidance from the U.S. Department of Education on qualifying for Legacy Provision is still forthcoming.

Interim Loan Limit Exception (Legacy Provisions for Graduate and Professional Students)

You qualify as an eligible graduate or professional student under the limited exception only if you

  • were enrolled in a program of study at an institution as of June 30, 2026;
  • received at least one Direct Loan for such program of study prior to July 1, 2026; and
  • are currently enrolled at the same institution in the same program of study and have not ceased to be enrolled in the same program at the same institution at any point on or after July 1, 2026 ("enrolled" means registered for Fall 2026 classes as of June 30, 2026).

New Loan Caps for Graduate and Professional Borrowers (New Borrowers Only) - Starting July 1, 2026

  • Graduate (non-professional): Up to $20,500 per year with a $100,000 lifetime limit and does not include amounts borrowed as an undergraduate.
  • Professional programs (海角社区’s qualifying professional program are Doctor of Pharmacy and Doctor of Clinical Psychology): Up to $50,000 per year with a $200,000 lifetime limit and does not include amounts borrowed as an undergraduate.
  • All Direct Loans (including Graduate PLUS loan, excluding Parent PLUS loan) are part of the larger lifetime cap of $257,500. 

Graduating and Former Students

Loan Repayment Changes

For questions about your loan repayment, contact your federal loan servicer directly. You can find your servicer by logging in at and viewing your federal loan details.

  • Watch the timeline carefully:
    While many changes under the bill begin July 1, 2026, some new loan repayment regulations do not take effect until July 1, 2027, and certain provisions and deadlines extend into 2028. Be sure to review all dates closely to understand how your loans may be affected.
  • Many existing income-driven repayment plans (e.g., SAVE, PAYE, IBR) will be replaced or phased out.
  • A new Repayment Assistance Plan (RAP) will be available as one of the main repayment options for new borrowers.
  • Details about repayment plans and transitions for current borrowers are still being finalized. 

Loan Rehabilitation Updates

New federal rules expand loan rehabilitation options for borrowers in default:

  • Borrowers may now rehabilitate a defaulted federal student loan up to two times (previously limited to one time).
  • The minimum monthly rehabilitation payment for Direct Loans is $10.

These changes provide additional flexibility for borrowers working to bring defaulted student loans back into good standing.

What This Means for You

If you’re enrolled now (before July 1, 2026):

  • You may qualify for Legacy provisions under old rules (like loan limits or PLUS loan access) for up to three academic years or until you finish your current program.

If you start school on or after July 1, 2026:

  • You will be subject to the new loan limits and rules right away.

FAFSA applications starting with the 2026-27 cycle will reflect these new rules.

Where to Find Official Information

For official federal guidance:

  • Visit and search for Big Updates.
  • Check with the 海角社区 Financial Aid Office for campus-specific guidance.
  • Stay alert for updated federal regulations throughout 2026 as details are finalized.