One Big Beautiful Bill Act (OBBBA)

Major federal statutory updates under the One Big Beautiful Bill Act (OBBBA) alter borrowing limits, loan availability, Pell Grant rules, and repayment options. Please review how these federal mandates affect your aid package.

1. Summary of Key Title IV Changes

• Grad PLUS Elimination: The Federal Grad PLUS loan program is discontinued for new borrowers. Unsubsidized Direct Loans remain available up to annual statutory cap limits.
• Parent PLUS Capping: Parent PLUS borrowing is capped at $20,000/year and $65,000 lifetime per dependent student across all combined parents.
• Loan Proration: Students enrolled less-than-full-time will see annual Direct Loan maximums prorated in proportion to enrolled credits.
• New Lifetime Aggregate Limit: An overall statutory lifetime limit of $257,500 applies across all combined undergraduate and graduate borrowing.

2. Direct Loan Limits & Exceptions Matrix

3. Pell Grant & Repayment Updates

• Pell Grant SAI Cutoff: Students with a Student Aid Index (SAI) exceeding $14,790 (twice the maximum Pell award) or whose non-federal aid covers 100% of Cost of Attendance (COA) are ineligible for Pell Grants.
• Repayment Plan Restructuring: New borrowing simplifies into two primary repayment options: the Tiered Standard Plan and the Repayment Assistance Plan (RAP). Legacy IDR plans (SAVE, PAYE, ICR) phase out by June 30, 2028.

Q: When a student is considered a “legacy borrower,” what does that mean? 

A: Students who are eligible for the interim exception to the new loan limits have been referred to by some as legacy borrowers. Eligibility for the interim exception is contingent upon whether a student was enrolled in a program of study at an institution as of June 30, 2026, and received a Direct Loan for that program prior to July 1, 2026, (see interim exception under §§ 685.200, 685.201, and 685.203). Once eligibility is established, students are eligible for the pre-Working Families Tax Cuts Act (pre-July 1, 2026 rules) loan limits during their expected time to credential, defined as the expected time for a student to complete a program that is equal to the lesser of three academic years, as defined in § 668.3, or the period determined by calculating the difference between the program length for the program of study in which the individual is enrolled and the period of such program of study that such individual has completed prior to July 1, 2026 (§ 685.102(b)). For graduate and professional students who have established eligibility for the interim exception, the annual Unsubsidized Loan limit is $20,500 and they can continue to borrow Grad PLUS Loans up to the cost of attendance minus other financial assistance. Their aggregate Unsubsidized and Subsidized Loan limit is $138,500, including the student’s undergraduate loans (§§ 685.203(b) through (e)). For parent borrowers who have established eligibility for the interim exception, Parent PLUS Loan borrowing remains up to the cost of attendance minus other financial assistance. Undergraduate borrowing is unaffected. No eligible borrowers are subject to the Lifetime Maximum Aggregate Loan Limit during their expected time to credential (§§ 685.203(f)(2)(ii), (g)(3), and (j)(3)).

Q: What happens if a student takes an approved Title IV leave of absence (i.e., active-duty military personnel) after a student has established eligibility for the interim exception?

A: Approved leaves of absence (LOAs) do not count as withdrawals, in accordance with § 668.22. Therefore, the student maintains eligibility for the interim exception during their LOA and that leave period is not counted toward their expected time to credential. The student must return to the same program within 180 calendar days to remain eligible for the interim exception in accordance with §§ 668.4 (f) and (g).

Q: Do students who change majors during their undergraduate study retain eligibility for the interim exception? What about students who go from a BS to a BA? Will it matter if a student is undeclared and then moves into a program for their bachelor's degree? 

A: Students who change undergraduate majors (including from an undeclared to declared major or between a BS and BA degree) are not considered to have changed a program of study. As a result, they retain eligibility for the interim exception during their expected time to credential. 

Q: A student is currently in a program and has received undergraduate loans, but the parent did not take out a Parent PLUS Loan. Would that parent be subject to the new loan limits if they decide to take out a loan on or after July 1, 2026? 

A: The parent of a dependent borrower would be subject to the new loan limits on or after July 1, 2026, if neither they nor the student took out a Direct Loan prior to July 1, 2026, for the program of study at an institution that the student was enrolled in by June 30, 2026. If, however, the student received a Direct Loan prior to July 1, 2026, for that program of study, the parent would be eligible for the interim exception to the new loan limits during the student’s expected time to credential, defined as the lesser of three academic years and the difference between the program length and the period of such program of study that such individual has completed prior to July 1, 2026 (§§ 685.102(b), 685.203(f) and (g)).

Q: If a student enrolls less than half-time, do they still meet the conditions for the interim exception? 

A: The conditions to meet the interim exception are that the student is enrolled in a program of study at an institution as of June 30, 2026, and that they have received a Direct Loan for that program prior to July 1, 2026 (see interim exception under §§ 685.200, 685.201, and 685.203). There is no minimum credit enrollment requirement. However, it is important to note that borrowers must have remaining eligibility on their expected time to credential (the lesser of three years or the difference of the program length minus the length of time in the program) to receive loan funds (§ 685.102(b)).

Q: What is the difference between withdrawal and dropping a course? Would a student lose eligibility for the interim exception if they drop a course? 

A: Eligibility is based on whether a student is considered enrolled at the institution, not enrollment status (i.e., three-quarter time, half time, etc.). A student would only lose eligibility if they were considered to have withdrawn from all of their coursework and are no longer considered a student at your institution, not if they drop a course that changes their enrollment status (§ 668.22).

Q: Is the expected time to credential the same as the student’s graduation date? 

A: No. The expected time to credential is calculated beginning on July 1, 2026, and it is the lesser of three academic years or the difference between the program length for the program of study in which the individual is enrolled and the period of such program of study that such individual has completed prior to July 1, 2026. Program length is defined as the minimum amount of time in weeks, months, or years that is specified in the catalog, marketing materials, or other official publications of an institution for a full-time student to complete the requirements for a specific program of study. In some cases, this will be before the student’s actual graduation date (§ 685.102(b)).

Q: Is the expected time to credential measured in academic years, calendar years or award years? 

A: Expected time to credential is measured in academic years, as defined in § 668.3.

Q: If a student’s graduation date has changed to add additional time to complete their degree (because of failing courses, changing majors, adding a study abroad opportunity, etc.), does their expected time to credential extend? 

A: The expected time to credential is the lesser of three academic years or the difference between the program length and the period of such program of study that such individual has completed prior to July 1, 2026. The school is responsible for calculating the expected time to credential on July 1, 2026, based on their policies regarding program length and enrollment status, noting that all periods of enrollment contribute to this calculation. If the student’s graduation date changes, regardless of the factors controlling that change, the expected time to credential is not recalculated (§ 685.102(b)).

Q: How have the loan limits changed for the undergraduate student vs. the parent? 

A: The annual and aggregate Subsidized and Unsubsidized Loan limits for undergraduate students have not changed. Prior to July 1, 2026, the aggregate limit for Subsidized and Unsubsidized Loans for both undergraduate and graduate study was $138,500. On or after July 1, 2026, the $257,500 Lifetime Maximum Aggregate Loan Limit includes Title IV received as an undergraduate and graduate or professional student but does not include any Parent PLUS Loans taken on behalf of a dependent borrower. On or after July 1, 2026, the $257,500 Lifetime Maximum Aggregate Loan Limit includes Title IV received as an undergraduate and graduate or professional student but does not include any Parent PLUS Loans taken on behalf of a dependent borrower. The annual and aggregate limits for Parent PLUS for parents of undergraduate students have changed to become $20,000 and $65,000 per dependent undergraduate student, respectively. Note, if the student qualifies for the interim exception, the parent may still borrow up to their dependent student’s cost of attendance minus other financial assistance during the student’s expected time to credential (§§ 685.203(a) through (g)).

Q: For students who are not actively enrolled on June 30, 2026, do they "start over" with the new loan limits? Will any outstanding balances count towards their new loan limits? 

A: All Title IV loans previously borrowed (except Parent PLUS Loans made on behalf of a dependent borrower) will count toward the aggregate and Lifetime Maximum Aggregate Loan Limit for borrowers not enrolled in a program of study as of June 30, 2026, (and therefore not eligible for the interim exception). Loan limits do not “start over” on July 1, 2026 (§§ 685.203(b) through (j)). Additionally, all Direct Loans received in the same academic year are counted against their annual limit.

Q: If a graduate student completes or withdraws from their program of study, do all previous borrowed loans count toward their $100,000 aggregate loan limit? 

A: Graduate students are subject to the new $100,000 aggregate loan limit when they complete or withdraw from the program in which they are currently enrolled. All Subsidized and Unsubsidized Loans previously borrowed for graduate degrees count toward the $100,000 limit. These students may not receive additional Unsubsidized Loans until they are repaid, whether in full or in part (§ 685.203(e)(4)). These loans also count toward the students’ $257,500 Lifetime Maximum Aggregate Loan Limit, which is without regard to any amounts repaid, forgiven, canceled or otherwise discharged on any such loan (§ 685.203(j)(2)).

Q: If a student is still enrolled in their program beyond their program length and the student has not completed their degree and their parent has already borrowed $65,000 in Parent PLUS Loans for their student, will the parent have any PLUS borrowing eligibility left? 

A: No. If the parent borrower is not eligible for the interim exception because the student is enrolled beyond their program length, they cannot continue to borrow once they reach the $65,000 aggregate maximum limit (§ 685.203(g)). 

Q: Can each parent borrow $20,000 annually ($65,000 in aggregate) for one child? 

A: No. The Parent PLUS limit is $20,000 annually ($65,000 in aggregate) per dependent student (§§ 685.203(f) and (g)), as long as all other eligibility criteria are met, including the receipt of any other financial assistance.

Q: If a student starts on or after July 1, 2026, and the parent is subject to the $65,000 Parent PLUS cap, do we include any Parent PLUS Loans the parent borrower received at other schools when calculating that limit, or does the borrower start fresh under the new cap? 

A: Yes. The $65,000 aggregate limit for Parent PLUS is per dependent student and includes all past borrowing on behalf of that dependent student, including at other schools (§ 685.203(g)). 

Q: If a student is subject to the new loan limits, but has already accumulated over $257,500 in loans, what happens? 

A: This student has no remaining Federal loan eligibility and should discuss alternative funding options with their school’s financial aid office (§ 685.203(j)(2)). 

Q: Do Grad PLUS Loans count toward the $257,500 Lifetime Maximum Aggregate Loan cap? What about undergraduate loans? 

A: All Title IV loans borrowed by a student, except those made as a parent borrower on behalf of a dependent student, count toward the Lifetime Maximum Aggregate Loan Limit. This limit, therefore, includes Grad PLUS and undergraduate loans (§ 685.203(j)(2)). 

Q: What is the difference between the annual limit, aggregate limit, and the Lifetime Maximum Aggregate Loan Limit? 

A: Below is a summary of the loan limits in effect prior to and after July 1, 2026 (§§ 685.200 and 685.203):

Legacy Loan Limits

(Applicable to borrowers eligible for the interim exception)

Loan Limits Effective July 1, 2026

(Applicable to new borrowers or those not eligible for interim exception)