Federal Student Aid Changes Effective July 1, 2026
Beginning July 1, 2026, significant changes to federal financial aid programs will take effect because of the One Big Beautiful Bill Act (OBBBA). These changes impact how much students and parents can borrow, which loan programs are available, and how federal loans are repaid.
Most students currently enrolled before July 1, 2026, may qualify for limited “legacy” (grandfather) provisions, while students entering new programs on or after July 1, 2026, will be subject to the new rules.
Financial Aid Program Changes at a Glance
What’s changing:
- Annual borrowing limits remain the same for undergraduate students.
- All federal student loans will now count toward a new lifetime federal loan cap of $257,000 (excluding Parent PLUS Loans).
- Beginning July 1, 2026, annual loan eligibility will be reduced for students enrolled less than full‑time.
What this means for you:
- If you enroll part‑time, your yearly loan eligibility may be reduced.
- Undergraduate borrowing remains relatively stable but counts toward the new lifetime maximum.
What’s changing:
- Annual loan limits remain $20,500 per year for most graduate programs.
- Annual loan limits for professional programs (veterinary medicine) increase to $50,000 per year.
- New lifetime limits are established:
- Graduate programs: $100,000 maximum
- Professional programs (veterinary medicine): $200,000 maximum
- Additional loan eligibility previously available for certain health professions is eliminated.
What this means for you:
- Graduate borrowing is now capped more clearly, and federal loans may no longer cover the full cost of attendance.
- Careful long‑term borrowing planning is more important than ever.
What’s changing:
- Graduate PLUS Loans are eliminated for new borrowers as of July 1, 2026.
- Graduate students will no longer be able to borrow up to the full cost of attendance through federal loans.
- A legacy provision allows some currently enrolled graduate students to continue using Grad PLUS Loans for their current program of study:
- Up to three additional academic years, or
- Until completion of their current program (whichever comes first).
What this means for you:
- Students starting graduate or professional programs in 2026–27 or later will need to rely on:
- Direct Unsubsidized Loans (within new limits)
- Scholarships, assistantships, savings, or private loans
What’s changing:
- New borrowing caps apply for new Parent PLUS borrowers:
- $20,000 per year per dependent student
- $65,000 lifetime limit per dependent student
- These limits apply regardless of repayment, forgiveness, or discharge.
- Parents who borrowed or whose students borrowed a Direct Loan before July 1, 2026, may qualify for legacy borrowing rules tied to that specific student.
What this means for you:
- Parent PLUS Loans may no longer cover the full cost of attendance.
- Families may need to combine multiple funding sources to pay for college.
Important Reminder About Legacy (Grandfather) Provisions
Many of these changes include limited legacy protections for borrowers who:
- • Were enrolled in the same program before July 1, 2026, and
- • Received a federal loan for that program before July 1, 2026, and
- • Continue in the same program and institution.
Changing programs, institutions, or enrollment status may affect eligibility. Check with the Office of Student Financial Aid if you have questions regarding your eligibility.