Summary of Upcoming Changes
The One Big Beautiful Bill Act (OB3), signed into law on July 4, 2025, introduces several important updates to federal student loan programs.
Although no changes will affect federal loans for the Academic Year 2025-2026, significant adjustments will take effect on July 1, 2026.
These new regulations will primarily affect part‑time undergraduate students, parents of undergraduate students, and part‑time graduate and professional students.
If you plan to borrow federal loans for Academic Year 2026-2027 or later, please review the updates below to understand how they may influence your funding strategy.
Key Policy Changes for Undergraduate Students & their Parents
undergraduate-students
Parent PLUS Loan Limits
Parent PLUS Loan Limits
Newly enrolled first-year students (freshmen) and transfer students for Academic Year 2026-2027 and going forward may qualify for up to $20,000 per year in Parent PLUS Loans, with a $65,000 lifetime (aggregate) limit per dependent student.
Continuing undergraduate students who received a federal Direct Loan before July 1, 2026, may continue borrowing under the current Parent PLUS Loan limits either for up to three additional academic years or for the remainder of their program — whichever is shorter.
For additional information, please review the Legacy (Grandfathering) Provisions accordion below.
Proration of Annual Loan Amounts
Proration of Annual Loan Amounts
Annual loan limits must be prorated for students enrolled less than full-time. This requirement applies to all students and is not subject to legacy provisions.
Undergraduate full-time study is defined as being enrolled in 12 or more credits applicable toward your degree.
Repayment Plan Updates
Repayment Plan Updates
OB3 introduces new repayment structures, including a new Standard Repayment Plan and a new income‑based Repayment Assistance Plan (RAP).
Several existing repayment plans will be discontinued on July 1, 2028. For more information, please visit the Federal Student Loan Repayment Plans webpage on the Federal Student Aid website.
Legacy (Grandfathering) Provisions
Legacy (Grandfathering) Provisions
Parents may continue borrowing under the current Parent PLUS Loan rules for up to three additional years if both of the following conditions are met:
- The student remains enrolled in the same degree type in Academic Year 2026-2027 as they were before July 1, 2026, and continues in that same degree type.
- The student must have borrowed a federal loan (subsidized or unsubsidized), or the parent must have borrowed a federal PLUS loan for that specific academic program before July 1, 2026.
Students who begin a new degree program on or after July 1, 2026, will be subject to the new federal loan limits.
Students enrolled in a combined bachelor’s and master’s program will be subject to new graduate‑level loan limits once their status is updated to graduate student, which occurs when the student enrolls in their thirteenth graduate-level credit.
Key Policy Changes for Graduate & Professional Students
graduate-professional-students
Graduate PLUS Loan Eligibility
Graduate PLUS Loan Eligibility
Newly enrolled graduate and professional students — including those who change degree programs — will no longer be eligible for the Graduate PLUS Loan.
Current graduate and professional students who borrowed federal loans before July 1, 2026, may retain Graduate PLUS eligibility either for up to three additional academic years or for the remainder of their current program — whichever is shorter.
Direct Unsubsidized Loan Eligibility
Direct Unsubsidized Loan Eligibility
Graduate Students
New graduate students may borrow up to $20,500 per year with a lifetime (aggregate) limit of $100,000.
Existing borrowers may continue under current Direct Unsubsidized Loan limits either for up to three additional academic years or for the remainder of their program — whichever is shorter.
Professional Students (PhD in Clinical Psychology)
New professional students may borrow up to $50,000 per year, with a lifetime (aggregate) limit of $200,000.
Existing borrowers may continue borrowing under current Direct Unsubsidized Loan limits either for up to three additional academic years or for the remainder of their program — whichever is shorter.
Proration of Annual Loan Amounts
Proration of Annual Loan Amounts
Annual loan limits must be prorated for students enrolled less than full-time. This requirement applies to all students and is not subject to legacy provisions.
Graduate or professional full-time study is defined as being enrolled in nine or more credits applicable toward your degree.
Repayment Plan Updates
Repayment Plan Updates
OB3 introduces new repayment structures, including a new Standard Repayment Plan and a new income‑based Repayment Assistance Plan (RAP).
Several existing repayment plans will be discontinued on July 1, 2028. For more information, please visit the Federal Student Loan Repayment Plans webpage on the Federal Student Aid website.
Legacy (Grandfathering) Provisions
Legacy (Grandfathering) Provisions
You may continue to borrow under current federal loan rules — including Graduate PLUS Loans up to the Cost of Attendance — for up to three additional years if you meet both of the following conditions:
- You are enrolled in the same credentialed degree program in 2026-2027 that you were enrolled in before July 1, 2026.
- You borrowed at least one federal student loan (Subsidized, Unsubsidized or Grad PLUS) for that degree program before July 1, 2026.
If you change programs or begin a new degree on or after July 1, 2026, you will immediately become subject to the new loan limits.
New Lifetime Borrowing Cap
New Lifetime Borrowing Cap
OB3 establishes a new lifetime (aggregate) limit of $257,500 for all federal student loans combined.
This cap includes the total outstanding principal balance of subsidized and unsubsidized loans, including undergraduate- and graduate-level borrowing.
| Loan Types & Limits | Undergraduate subsidized / unsubsidized loans (no change) | Graduate unsubsidized loans | Professional unsubsidized loans | Parent PLUS loans |
|---|---|---|---|---|
| Annual Limit | $8,500 to $12,500 | $20,500 | $50,000 | $20,000 |
| Aggregate Limit | $31,000 to $57,500 | $100,000 (Not including undergraduate loans | $200,000 (Combined graduate and professional loans; not including undergraduate loans) | $65,000 (Without regard to any amounts repaid, forgiven, cancelled or otherwise discharged)
|
Lifetime Limit (All levels; PLUS loans excluded) | $257,000 (Without regard to any amounts repaid, forgiven, cancelled or otherwise discharged) | $257,000 (Without regard to any amounts repaid, forgiven, cancelled or otherwise discharged) | $257,000 (Without regard to any amounts repaid, forgiven, cancelled or otherwise discharged) | N/A |