One Big Beautiful Bill Act: Changes to Federal Student Aid
The One Big Beautiful Bill Act (OB3), signed July 4, 2025, introduces major changes to federal student loans beginning July 1, 2026. The updates primarily affect graduate and professional students and parents of dependent undergraduates. Guidance may be updated prior to implementation.
Federal Student Loan Program
Loan Reduction (New Beginning July 1, 2026)
Beginning July 1, 2026, annual Direct Loan eligibility will be prorated based on enrollment level. Students enrolled less than full-time will be eligible to borrow only a proportional amount of their annual limit, similar to Pell Grant proration. The U.S. Department of Education is expected to release additional details on calculation methods.
Lifetime Loan Limit Details (Important)
Lifetime (aggregate) limits include all federal Direct Loans borrowed for graduate and professional study—even if previously repaid, canceled, forgiven, or discharged. Parent PLUS loans are not counted toward these lifetime limits.
Graduate and professional aggregate limits do not reset when beginning a new degree or program. There is a combined graduate/professional total cap of $200,000. For example, a student who borrows $120,500 to complete a graduate degree will have $79,500 of remaining eligibility if they later enroll in a professional program.
Elimination of Graduate PLUS Loans (New Borrowers)
Effective July 1, 2026, the Federal Graduate PLUS Loan program is eliminated for new graduate and professional borrowers. Access to Graduate PLUS remains only for students who qualify under the legacy (grandfathering) provision.
Graduate PLUS Legacy Provision (Graduate PLUS)
At the 91次元, a graduate student qualifies for legacy borrowing provisions if they received at least one federal student loan disbursement for their current graduate program prior to July 1, 2026, and were enrolled in that program during an academic term occurring before July 1, 2026 (such as Spring 2026). Summer enrollment is not required if eligibility is established through Spring 2026 enrollment and borrowing.
Eligible legacy borrowers may continue borrowing under current Graduate PLUS and Direct Loan rules for up to three additional academic years or until program completion, whichever occurs first. Legacy status applies only to the borrower’s current program of study.
Parent PLUS Loans (New Borrowers)
Beginning July 1, 2026, Parent PLUS Loans will be subject to new annual and lifetime ceilings. Parents will no longer be able to borrow up to the full cost of attendance; specific caps apply as outlined by federal guidance.
Parent PLUS Legacy Provision (Parent PLUS)
A parent borrower qualifies for legacy Parent PLUS borrowing if a Federal Direct Loan (Parent PLUS or other Direct Loan) was disbursed prior to July 1, 2026 while the dependent student was enrolled in a program of study. Eligible parent borrowers may continue borrowing under current Parent PLUS loan limits for up to three academic years or the dependent student’s remaining expected time to credential, whichever is less.
Loan Repayment
Federal Loan Repayment Options (Framework)
OB3 streamlines federal repayment by reducing the number of plans. Prior income-driven repayment (IDR) options are being sunset and replaced with a simplified structure.
Changes to Repayment Plans
Beginning with loans entering repayment after July 1, 2026, many existing IDR plans will no longer be available to new borrowers. Borrowers will generally choose between a fixed-payment plan and a single-income-based plan designed to improve affordability.
Available Repayment Plans
- Standard Repayment Plan: Fixed payments designed to repay the loan within a set amortization period.
- Repayment Assistance Plan (RAP): An income-based plan that sets payments based on income and family size, with potential interest benefits or extended terms per federal regulation. Additional details will be provided by the U.S. Department of Education when final rules are issued.
Parent PLUS Loan Repayment Options
Parent PLUS borrowers will have repayment options consistent with federal rules in effect after July 1, 2026. Consolidation may affect eligibility for certain plans and terms.
Consolidated Loan Repayment Options
Loan consolidation can simplify repayment and may change plan eligibility. Under OB3, consolidated loans will follow the repayment plan options available to the resulting consolidated loan type. Borrowers should review how consolidation affects interest accrual, capitalization, and eligibility for forgiveness programs.
Federal Pell Program
Pell Grant Eligibility Changes
OB3 preserves the Federal Pell Grant program and introduces adjustments beginning with the 2026–27 year. Among the changes, eligibility rules for certain program types may expand, and award calculations will continue to follow federal guidance issued by the U.S. Department of Education.