Federal Student Aid Changes with the One Big Beautiful Bill Act (OBBBA)

One of the most important changes under OBBBA is the requirement that federal loan eligibility must be prorated based on a student’s enrollment status:

• Students enrolled less than full-time (12 undergraduate credits/6 graduate credits) will have their annual loan limits reduced proportionally based on the percentage of full-time enrollment.
• For example, a student enrolled half-time (6 undergraduate credits/3 graduate credits) is only eligible for 50% of the annual loan limit they would receive at full-time status.

This change affects both undergraduate and graduate borrowers and replaces prior practice where less than full-time enrollment might not have reduced loan eligibility the same way.

Undergraduates will still have access to Federal Direct Subsidized and Unsubsidized Loans.

What stays the same:

• Annual and aggregate loan limits remain the same (although undergraduate loans will count towards the new lifetime limits).

What’s new:

• Annual loan amounts are adjusted down if enrolled less than full-time
• Other loan types, like the Federal Parent PLUS Loan, now have new caps (see below)

OBBBA has major changes for graduate and professional student borrowing:

Graduate Students (Non-professional programs)

• Graduate PLUS Loans will no longer be available for new borrowers as of July 1, 2026*.
• Graduate students will be limited to Direct Unsubsidized Loans with:
  • Annual limit: $20,500
  • Aggregate limit: $100,000
• Loan amounts are prorated for less than full-time enrollment (6 graduate credits).

* Legacy Provision:

A student can continue to borrow from the Graduate PLUS Loan program if:

1. The student has a Federal Direct Loan disbursed before July 1, 2026, while enrolled in a credentialed program of study, AND
2. The student is enrolled in the same credentialed program.

Under these conditions, the student may continue to borrow from the Graduate PLUS Loan for 3 academic years or until the end of the program of study, whichever comes first.

Federal Parent PLUS loans will now be capped at:

• $20,000* per year per dependent student
• $65,000** lifetime per dependent student

These caps are new, replacing the prior ability to borrow up to the full cost of attendance without a lifetime limit.

* Limits apply to all parents of a student, regardless of whether one or more parents are borrowing on a student’s behalf

** Legacy Provision:

A parent can continue to borrow funds from the Parent PLUS Loan program, exceeding these limits if:

1. The student has a Federal Direct Loan disbursed before July 1, 2026, while the dependent student was enrolled in a credentialed program of study, AND
2. The student is enrolled in the same credentialed program.

Under these conditions, a parent may continue to borrow from the Parent PLUS Loan for 3 academic years or until their dependent student reaches the end of their program of study, whichever comes first.

All Federal student loan borrowing (excluding Federal Parent PLUS loans) will be subject to a combined lifetime cap of approximately $257,500 across all loan types — a first under federal law.

Students will no longer be eligible for a Pell Grant if their Student Aid Index (SAI) is greater than twice the maximum Pell award for that year. For the 2026-2027 academic year, the maximum Pell award is $7,395; therefore, an applicant with an SAI equal to or greater than $14,790 for the award year is ineligible for a Pell Grant.

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