Enacted in July 2025, the One Big Beautiful Bill Act (OBBB) introduced significant changes to federal student loan programs as part of broader fiscal policy reforms. The AU Office of Financial Aid continues to monitor guidance from the U.S. Department of Education and will update this site as additional information becomes available.

Financial aid for the 2025–2026 academic year is not impacted. Most changes outlined below take effect July 1, 2026.

Select the appropriate section below to learn how OBBB may affect:

• Undergraduate Students
• Graduate and Professional Students

Undergraduate Federal Student Aid

Federal Pell Grant

• Students whose total non-federal aid (scholarships and grants) meets or exceeds the Cost of Attendance (COA) are not eligible for Pell Grant funding.
• Students with a Student Aid Index (SAI) of $14,790 or higher (twice the maximum Pell Grant) are ineligible.

Federal Student and Parent Loans

Current Undergraduate Borrowers (Legacy Eligibility)

Currently enrolled undergraduate students may qualify for legacy provisions if they meet the following criteria:

• Began enrollment in a degree-seeking undergraduate program before July 1, 2026;
• Received at least one Federal Direct Loan prior to July 1, 2026 within the current program (students who transfer may still qualify);
• Have not exceeded the published program length (typically four years); and
• Remain continuously enrolled in fall and spring terms after July 1, 2026.

Legacy Provisions Eligible legacy students may continue under pre-OBBB loan limits and programs for either:

• The remaining published program length, or
• Up to three academic years, whichever is shorter.

Current Borrowers with Loans Disbursed Before July 1, 2026

• Annual Federal Direct Subsidized and Unsubsidized Loan limits remain unchanged for full-time students. Loans for part-time enrollment will be prorated.
• Parent PLUS Loan borrowers may continue borrowing for the remainder of the student’s current program while legacy status applies.
• Grandfathered Parent PLUS borrowers are not subject to new annual or lifetime limits during the legacy period (up to remaining program length or three years, whichever is less).

First-Time Borrowers (Effective July 1, 2026)

Federal Loan Limits

• All new federal student loan borrowers are subject to a lifetime borrowing cap of $257,500, excluding Parent PLUS Loans.
• Undergraduate annual and aggregate Direct Loan limits remain unchanged, though loans will be prorated for less-than-full-time enrollment.
• Parent PLUS Loans will be subject to new limits:
  • Up to $20,000 per academic year per student
  • $65,000 lifetime maximum per student (combined across all parents)

Federal Student Loan Repayment

• The Standard Repayment Plan remains unchanged.
• The Repayment Assistance Plan (RAP) will replace existing income-driven repayment plans, unless the borrower qualifies under a legacy provision.
• Legacy repayment protections apply to borrowers who meet eligibility criteria described above.

Graduate and Professional Federal Student Loans

As of March 2026, the information below reflects current guidance regarding the impact of OBBB on graduate and professional borrowers.

Current Graduate Students (Legacy Eligibility)

Currently enrolled graduate students may qualify for legacy provisions if they:

• Began enrollment in a graduate program before July 1, 2026;
• Received at least one Federal Direct Loan prior to July 1, 2026 in the current program;
• Have not exceeded the published program length; and
• Remain continuously enrolled in the same program at the same institution after July 1, 2026.

Legacy Loan Limits (2026–2027 and Beyond)

Federal Direct Unsubsidized Loans

• Graduate programs: Annual limit of $20,500 remains unchanged; loans will be prorated for less-than-full-time enrollment starting in 2026–2027.
• Professional programs (e.g., law, clinical psychology):
  • Up to $50,000 annually
  • $200,000 lifetime aggregate limit
• Other graduate programs: Up to $100,000 lifetime aggregate limit
• The overall aggregate limit for combined undergraduate and graduate borrowing remains $138,500 while under legacy status.

Legacy limits apply until the student completes their published program length or for three additional years, whichever is shorter. Continuous enrollment is required to maintain legacy status. Taking a semester off may result in loss of eligibility, pending final ED guidance.

Graduate PLUS Loans

• The Graduate PLUS Loan is being phased out.
• Students who begin enrollment on or after July 1, 2026, or who have never borrowed a Direct Loan before that date, will not be eligible.
• Legacy students may continue borrowing Graduate PLUS loans for the remainder of their published program length or up to three years, whichever is less, provided continuous enrollment is maintained.

Non‑Legacy Graduate and Professional Students

Students who begin enrollment on or after July 1, 2026, or who break legacy status by changing programs or taking time off, will be subject to new loan rules:

• Federal Direct Unsubsidized Loan annual limit remains $20,500, with proration for less-than-full-time enrollment.
• Aggregate loan limits:
  • $100,000 for graduate programs
  • $200,000 for professional programs
• Once the lifetime aggregate limit is reached, additional borrowing is not permitted.
• Federal Direct PLUS Loans will no longer be available.

Graduate and Professional Loan Repayment

• The Standard Repayment Plan remains unchanged.
• The Repayment Assistance Plan (RAP) replaces income-driven repayment options unless the borrower qualifies under a legacy provision.
• Legacy repayment protections apply only to borrowers who enter repayment prior to July 1, 2026, and do not borrow additional federal loans afterward.

*Professional students generally include those enrolled in medical, law, and other advanced degree programs as defined by federal law. Final program classifications are pending guidance from the U.S. Department of Education.