Federal Student Aid Loan Updates 2026-2027
The One Big Beautiful Bill Act (OBBB), enacted in July 2025, made significant changes to federal student loan programs as a part of the shifts in fiscal policy. These changes affect undergraduate, graduate, and professional students. The U.S. Department of Education is currently working to provide guidance about this law, and while some provisions are clear, many others require further clarification. We understand that students and families have questions, and we are dedicated to supporting students through these changes.
It is important to note that:
- There are no changes to Federal Loans for the 2025-2026 academic year, from this legislation.
- Changes from this legislation will take effect on July 1st, 2026, for the 2026-2027 academic year.
Loan Changes
Federal Parent PLUS Loan Limits
- Annual limit: $20,000 per dependent student
- Lifetime limit: $65,000 per dependent student
These limits apply per student, regardless of the number of parents borrowing. For example, 2 parents borrowing for the same student are capped at $20,000 total for the academic year.
Legacy Provisions
Parent PLUS borrowers who borrowed for a student prior to July 1st, 2026, can continue to borrow under current rules (up to the Cost of Attendance) for a student while the student is completing their current degree program or up to three additional years, whichever occurs first, as long as the following criteria are met:
- The student must be enrolled in the same program they were attending prior to July 1st, 2026.
- The parent borrowed a Parent PLUS Loan for that student before July 1st, 2026.
Graduate PLUS Loans
- Under the bill, Graduate PLUS Loans will be eliminated for new borrowers beginning July 1st, 2026.
- Current borrowers may have some continuing eligibility for Grad PLUS as they complete their current degree program.
New Graduate Unsubsidized Loan Limits
- Graduate Programs
- Annual limit: Remains $20,500
- Aggregate Graduate Limit: Capped at $100,000 (not including undergraduate loans)
- Aggregate Lifetime Limit: Capped at $257,500 (all Federal Loans, including undergraduate and excluding Parent PLUS Loans)
- Professional Programs
- Annual Limit: Increased to $50,000
- Aggregate Professional Limit: Capped at $200,000 (not including undergraduate loans)
- Aggregate Lifetime Limit: Capped at $257,500 (all Federal Loans, including undergraduate and excluding Parent PLUS Loans)
Legacy Provisions
Current borrowers may continue to borrow under the current rules (including Graduate PLUS Loans up to the Cost of Attendance) while completing their current degree program or for up to three additional years, whichever occurs first, as long as BOTH of the following criteria are met:
- You are enrolled in the same credentialed program in 2026–27 that you were enrolled in prior to July 1, 2026.
- You borrowed a federal student loan (Subsidized, Unsubsidized, or Graduate PLUS) for that specific program before July 1, 2026.
If you change programs or start a new degree after July 1, 2026, you will be subject to the new limits.
Less-than-Full-Time Proration
Beginning July 1st, 2026, borrowers enrolled less-than-full-time will have their Federal Loans prorated based on their annual credit hours. You must have at least half-time enrollment to be eligible for any Federal Loans. This proration will apply to any Federal Loans borrowed after July 1st, 2026.
Full-time enrollment for Federal Aid purposes at Capital is:
- 12 credit hours for all undergraduate students
- 6 credit hours for graduate students (excluding Law)
- 8 credit hours for all law students
How to Prepare
We understand these changes may create uncertainty as you plan for future academic years. Listed below are a few steps you can take right now:
- Check your Loan History: Log into https://studentaid.gov/ with your FSA Username and Password to view your current Loan balance and borrowing history.
- Understand your status: Review the Legacy provisions to determine if you will qualify for them. If you are a currently enrolled student and have borrowed Federal Loans, you will generally be eligible.
- Plan for any gaps: If you anticipate your costs will exceed the new Federal Loan Limits, especially if you are a new graduate student or a parent borrower, then begin researching alternative options. This could include private education loans, outside scholarship/grant opportunities, or preparing personal savings.
- Consult our Office before changing programs or taking a leave of absence, as that may affect your ability to qualify for the Legacy provisions.
- Review your course plan to ensure it supports on-time completion for your program and minimizes part-time proration impacts, as that may affect your ability to qualify for the Legacy provisions.
Repayment
- The bill eliminates current income-driven repayment plans (IBR, PAYE, SAVE) for loans disbursed after July 1st, 2026.
- The changes will apply to both new and continuing borrowers.
- There will be two repayment plan options:
- A tiered Standard Repayment Plan
- An income-driven Repayment Assistance Plan (RAP)
- Students who have borrowed loans before July 1, 2026, and will borrow a new loan after July 1, 2026, are limited to the new RAP or the standard plans for the new loan.
- Borrowers with no new loans made on or after July 1, 2026, can continue to be eligible to enroll in the current Standard, current Income Based (IBR), Graduated, and Extended repayment plans, and could also opt in to the new RAP. Current borrowers enrolled in ICR, PAYE, or SAVE plans must transition to a new repayment plan by July 1, 2028. If no selection is made by that date, they will be moved into RAP.