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.
Overview
The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4th, 2025; however, the negotiated rulemaking committee (Reimagining and Improving Student Education) RISE, met over the course of the 2025-26 school year to create the proposed regulations for the loan-related provisions. After a review process and public comment period, the final regulations were published on May 1, 2026..
These 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 date for most of these changes is July 1, 2026, and/or the award year 2026-2027.
There are limited legacy provisions for students that are enrolled in a program of study as of June 30, 2026, have previously borrowed federal loans for their current program of study. The legacy eligibility will continue for the lesser of three academic years or the student’s expected time to program completion. Parent PLUS loans have new loan limits ($20,000 per year per dependent student and $65,000 aggregate limit per dependent student). Undergraduate loans limits have not changed.
Note – While final rules were recently published, the Department of Education continues to consistently put forth clarifying guidance regarding these regulations. The information provided here is based on what is known as of 7/1/2026.
What You Need to Know
Limited Legacy Provisions
The new rules have some limited legacy provisions that apply to some continuing students, but not all. Three years is the maximum timeframe for the legacy provisions, however, for many continuing students their timeframe is shorter. The legacy provision period is determined by the published full-time length of the student’s program minus the amount of time a student has already attended. The amount of time the student has already attended is based on the number of terms, not the number of credits taken. Once a student’s legacy provision timeframe expires, the new OBBBA rules apply. It is important to note that any break in enrollment (including a Prescott College leave of absence) may cause a loss of eligibility for legacy provisions. Also, the limited legacy provisions do not apply to the rule regarding reducing a student’s annual limit if they are attending less than full time. This rule regarding less than full time loan reductions applies to any borrower for 2026-27 forward.
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, nor do Parent PLUS loans count toward a student’s lifetime borrowing limit discussed below.
Undergraduate loan limits:
The law maintains the current limits for annual and aggregate borrowing and does not include any changes to undergraduate loan limits, except for the provision regarding annual loan limit reductions for less than full-time students.
Graduate PLUS loans:
Graduate PLUS loans will be eliminated entirely within the next three years. New student borrowers will not have this option beginning July 1, 2026, nor will continuing students who do not qualify for limited legacy provisions.
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 student loans, though this does not include any previously borrowed Graduate PLUS loans.
Lifetime borrowing cap on all federal loans:
The law contains a $257,500 borrowing cap on all federal student loans, including Graduate PLUS loans, but excluding borrowed Parent PLUS loan amounts. There is also a new $100,000 borrowing cap on any federal graduate level loans (excluding Graduate PLUS loans, repaid amounts and undergraduate loans).
Annual, aggregate, and lifetime loan limits effective date:
The new aggregate and lifetime loan limits went into effect July 1, 2026 for all new borrowers and borrowers who did not qualify for the limited legacy provisions discussed above. The rule regarding the reduced annual limit of less than full time borrowers (proportional to enrollment) went into effect with all 2026-27 award year loans beginning in May 2026.
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. This rule is effective for any 2026-27 award year loans beginning in May for Summer 2026 term.
Repayment plan changes:
The new law creates two new repayment plans: the tiered Standard plan and the Repayment Assistance Plan. More details on these two plans are now published on the federal student aid website. To learn more, go to: https://studentaid.gov/manage-loans/repayment/plans
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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