One Big Beautiful Bill Act
What you need to know about federal changes beginning July 1, 2026. Information provided here is based on information from NASFAA.org as of 11/20/2025.
Overview
The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4th, however, the negotiated rulemaking committee (Reimagining and Improving Student Education) RISE has been working over the past couple of months, focused on the implementation of regulations for the loan-related provisions. The final regulations are expected in early 2026.
These final regulations include changes to Graduate PLUS loans, Parent PLUS loans, the reduction of loans for less than full-time enrollment, graduate loan limits and annual, aggregate and lifetime loan limits. The effective dates for these changes are July 1, 2026 and the award year 2026-2027.
There are legacy provisions for students that are enrolled in a program of study as of June 30, 2026. The legacy eligibility will continue for the lesser of three academic years or the student’s expected time to program completion. Current students will continue to be eligible to borrow Graduate PLUS loans (if they have previously received Direct Loans). Parent PLUS loans have new loan limits ($20,000 per year per dependent student and $65,000 aggregate limit per dependent student). Undergraduate loans have not changed.
Note – final rules are expected in early 2026. Information provided here is based on information from NASFAA.org as of 11/20/2025.
What You Need to Know
Parent PLUS loans:
There are new Parent PLUS loan limits: a $20,000 per year cap per dependent student and a $65,000 aggregate limit per dependent student (without regard to amounts forgiven, repaid, canceled, or discharged). These provisions are effective July 1, 2026. Parent PLUS loans are not subject to annual loan limit reduction based on students’ enrollment level.
Undergraduate loan limits:
The law maintains the current limits for annual and aggregate borrowing and does not include any changes to undergraduate loan limits, with the exception of the provision regarding annual loan limit reductions for less than full-time students.
Graduate PLUS loans:
The law eliminates the Graduate PLUS program, effective July 1, 2026, with legacy provisions for current borrowers to complete their program of study.
Students who are enrolled in a program of study as of June 30, 2026, for whom a Direct Loan was made for that program of study prior to July 1, 2026, will be able to continue to borrow under the Graduate PLUS program and the current loan limits continue to apply. This legacy ability will continue for the lesser of three academic years or the student’s expected time to credential (which is defined as the difference between the program length and the period of the program the student has completed as of the date of determination [when loan is disbursed], where program length is the amount of time it takes a full-time student to complete the program).
Graduate loan limits:
For new borrowers after July 1, 2026, the law caps the annual graduate loan limits at $20,500 for graduate students. The aggregate limit is capped at $100,000 for graduate students.
Lifetime borrowing cap on all federal loans:
The law contains a $257,500 borrowing cap on all federal student loans, excluding borrowed Parent PLUS loan amounts.
Annual, aggregate, and lifetime loan limits effective date:
The new loan limits become effective on July 1, 2026, with a legacy provision included for current borrowers to borrow under current limits for the remainder of their expected time to credential or for 3 years, whichever is less.
Annual loan limit reduction for less-than-full-time enrollment:
The law requires institutions to reduce annual loan amounts in direct proportion to the percent of full-time the student is enrolled.
Repayment plan changes:
The new law creates two new repayment plans: the tiered Standard plan and the Repayment Assistance Plan.
Certain income-contingent repayment plans will be ending by July 1, 2028 including ICR-Income Contingent Repayment; PAYE-Pay as You Earn; and SAVE-Saving on a Valuable Education. Borrowers enrolled in these plans will need to change to one of the new plans by June 30. 2028 or they will be automatically enrolled in the RAP – Repayment Assistance Plan.
As of July 1, 2027, there will be additional loan repayment changes going into effect including loan rehabilitation, deferment changes and changes to forbearance timelines.
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