Federal Student Aid Changes from the One Big Beautiful Bill Act
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, introducing significant changes to programs authorized under the Higher Education Act. The summary below highlights several of these changes. This page will be updated as the U.S. Department of Education releases additional guidance.
This page was last updated on May 21, 2026.
PELL GRANT PROGRAM
- • Full COA Scholarships/Grants
FEDERAL DIRECT LOAN PROGRAM
- • Graduate PLUS Loan Program
- ‣ Effective Date: July 1, 2026
- ‣ Change: Eliminates the Graduate PLUS loan program.
- ‣ Limited Exception/Legacy Provision: Students can continue to borrow under the Graduate PLUS program (for up to three academic years or the remainder of their expected time to credential, whichever is less) if they remain continuously enrolled in the same program of study at the same institution as they were enrolled as of June 30, 2026 and for whom a Direct Loan was made for that program of study prior to July 1, 2026. For more information see: What Graduate Students Need to Know.
- • Parent PLUS Annual & Aggregate Loan Limits
- ‣ Effective Date: July 1, 2026
- ‣ Change: All parents (combined) may borrow $20,000 per year per dependent student and a $65,000 aggregate limit per dependent student (without regard to amounts forgiven, repaid, or discharged).
- ‣ Limited Exception: Parents are not subject to the new PLUS loan limits (for up to three academic years or the remainder of the student's expected time to credential, whichever is less) if the student remains continuously enrolled in the same program of study at the same institution as they were enrolled as of June 30, 2026 and either the parent had a Parent PLUS Loan disbursed for that same program before July 1, 2026, or the student had a Direct Loan (subsidized or unsubsidized) disbursed for that same program before July 1, 2026. For more information see: What New Parent Borrowers Need to Know and What Current Parent Borrowers Need to Know.
- • Graduate Annual & Aggregate Loan Limits
- ‣ Effective Date: July 1, 2026
- ‣ Change: Caps the annual loan limits at $20,500 for graduate students and $50,000 for professional students. The aggregate limit is capped at $100,000 for graduate students and $200,000 for professional students, and does not include amounts borrowed as an undergraduate.
- ‣ Limited Exception/Legacy Provision: Students are not subject to the new loan limits (for up to three academic years or the remainder of their expected time to credential, whichever is less) if they remain continuously enrolled in the same program of study at the same institution as they were enrolled as of June 30, 2026 and for whom a Direct Loan was made for that program of study prior to July 1, 2026. For more information see: 2026-27 & Beyond Graduate / Professional Student Loan Borrowing Limits and What Professional Students Need to Know.
- • Federal Loan Program Lifetime Loan Limit
- ‣ Effective Date: July 1, 2026
- ‣ Change: New lifetime federal loan limit of $257,500 for all Federal Direct student loans (excluding Parent PLUS loans) borrowed for all levels of study.
- ‣ Limited Exception: Students are not subject to the new lifetime loan limit (for up to three academic years or the remainder of their expected time to credential, whichever is less) if they remain continuously enrolled in the same program of study at the same institution as they were enrolled as of June 30, 2026 and they had a Direct Loan disbursed for that same program before July 1, 2026.
- • Loan Adjustments for Less-Than-Full-Time Enrollment
- ‣ Effective Date: Starting with the 2026-27 award year
- ‣ Change: Requires institutions to prorate annual loan amounts in direct proportion to the percent of full-time status the student is enrolled.
- ‣ Parent PLUS loans are not subject to these adjustments.
STUDENT LOAN REPAYMENT
- • Repayment Assistance Plan (RAP)
- ‣ Effective Date: July 1, 2026
- ‣ Change: Creation of new income-driven repayment plan July 1, 2026 called the Repayment Assistance Plan (RAP).
- ‣ Monthly payment is 1-10% of income based on AGI. $10 minimum monthly payment. $50 off monthly payment (base payment) per dependent. If married filing separately, spouse’s AGI and number of dependents are not included in the payment calculation. 30-year repayment period. Eliminates negative amortization. No cap on monthly payment. If a borrower makes an on-time payment that reduces their principal by less than $50, ED will make a payment to the principal, up to the amount paid, minus what was applied to the principal or $50, whichever is less.
- • Tiered Standard Repayment Plan
- ‣ Effective Date: July 1, 2026
- ‣ Change: Creation of a new standard repayment plan.
- ‣ Fixed monthly payments over 10, 15, 20, or 25 years based on total loan balance.
- • Repayment Plans for New Borrowers
- ‣ Effective Date: July 1, 2026
- ‣ Change: Borrowers with new loans made on or after July 1, 2026 can be repaid using only two plans: the new tiered standard repayment plan and the new income-based repayment plan, RAP. All new Parent PLUS loans from July 1, 2026 on must be repaid under the new tiered standard repayment plan, as these loans are not eligible for RAP.
- ‣ All loans must be paid under the same repayment plan, so borrowers with loans made before July 1, 2026, who take out additional loans on or after July 1, 2026, will only have RAP and the new tiered standard repayment plan as options. For more information see: Student Loan Repayment Plan Options As of July 1, 2026.
- • Repayment Plans for Current Borrowers
- ‣ Effective Date: July 1, 2026
- ‣ Change: Current borrowers with no new loans made on or after July 1, 2026, are eligible to enroll in the current Standard, Graduated, Extended, or Income-Based Repayment (IBR) plan, and may also opt in to the new RAP. Current borrowers may also switch between, enter, or remain on existing Income-Contingent Repayment (ICR) plans until July 1, 2028**.
- ‣ **Eligible borrowers must enroll in PAYE by July 1, 2027 due to actions related to the Saving on a Valuable Education (SAVE) plan litigation. This action is separate from OBBBA repayment changes. Borrowers enrolled before July 1, 2027 may remain in PAYE through July 1, 2028. Learn more.
- ‣ Borrowers who must consolidate in order to access IBR or ICR plans must have their consolidation loan disbursed no later than June 30, 2026, as a consolidation loan is considered a new loan and borrowers with loans on or after July 1, 2026 only have RAP and the new tiered standard plan available to them. After June 30, 2026, consolidated loans repaying Parent PLUS Loans would only have the new tiered standard plan available. For more information see: Student Loan Repayment Plan Options As of July 1, 2026.
- • Income Contingent Repayment Plans
- ‣ Effective Date: July 1, 2028
- ‣ Change: Existing income-contingent repayment plans (ICR, PAYE, SAVE) will be eliminated July 1, 2028.
- ‣ Current borrowers enrolled in ICR, PAYE, or SAVE plans must transition to an eligible repayment plan by July 1, 2028. If no selection is made by that date, they will be moved into RAP. Direct Consolidation Loans that included Parent PLUS Loans are ineligible for RAP, so these borrowers will be moved to IBR if they are enrolled in ICR prior to July 1, 2028.
- • Income Based Repayment Plan
- ‣ Effective Date: July 4, 2025
- ‣ Change: Removes the requirement for borrowers to demonstrate a partial financial hardship in order to enroll in IBR.
- • Loan Rehabilitation Terms
- ‣ Effective Date: July 1, 2027
- ‣ Change: Borrowers can rehabilitate a defaulted loan twice, instead of once as currently allowed. The minimum rehab payment for Direct Loans changes to $10.
- • Loan Deferment Options
- ‣ Effective Date: July 1, 2027
- ‣ Change: Sunsets the economic hardship and unemployment deferments.
- ‣ Borrowers with loans made before July 1, 2027, are still able to use these deferment options for those loans under the current rules.
- • Loan Forbearance
- ‣ Effective Date: July 1, 2027
- ‣ Change: Loans made on or after July 1, 2027, are eligible for forbearance for up to nine months in any two-year period.
- ‣ Current rules allow for a forbearance up to 12 months at a time, with a cumulative limit of three years.
ADDITIONAL INFORMATION and FAQs
- • For more details and to view the full summary from which much of this information was sourced, please refer to NASFAA’s Summary Document (05-19-2026).
- • You are also strongly encouraged to review Federal Student Aid’s webpages for the most current information related to the One Big Beautiful Bill Act: