One Big Beautiful Bill Act (OBBBA)

What changes have been made to federal student loan programs under the OBBBA?

The One Big Beautiful Bill Act (OBBBA), passed by Congress in July 2025, introduces changes effective July 1, 2026, without affecting borrowing for the 2025–26 academic year. Highlights include:

Federal Loan Borrowing Caps:

• Graduate, Professional, and Undergraduate Programs will all be subject to a prorated loan model for awards.  Previously, if you were enrolled at least half-time, you could often access your full annual loan limit. Starting July 1, 2026, annual federal loan eligibility will scale directly with credit load.
• Undergraduate and Parent PLUS Loans: As of July 1, 2026, Parent PLUS Loans are capped at $20,000 per student per year, with a $65,000 lifetime limit. While annual base limits remain the same, overall borrowing may be affected by proration and the new lifetime borrowing limit.
• Graduate Borrowers: Direct Unsubsidized Loans are limited to $20,500 per year and a $100,000 aggregate borrowing limit for graduate study.
• Professional Programs: Direct Unsubsidized Loans can be up to $50,000 per year with a $200,000 aggregate borrowing limit for professional study.

It is important to note that these limits apply to cumulative borrowing and may include loans borrowed across multiple programs.

How is my loan amount calculated if I’m not full-time?

Under the law, federal loan eligibility will be prorated based on enrollment intensity. The Department of Education is expected to issue final regulations and guidance on exactly how this will be implemented, but ultimately means your annual loan limit is multiplied by the percentage of a full-time load you are taking.

Examples below are illustrative and based on current understanding. Final federal guidance may refine how proration is calculated:

• Undergraduate Example: If full-time is 24 credits per year and you take 12 credits (half-time), you are eligible for 50% of your annual limit.
• Graduate/Legacy Professional Example: If your program considers 18 credits a full year and you take 9, you are eligible for 50% of the $20,500 limit ($10,250).

I’ve been a part-time student since 2024. Will my loans be cut by proration in July 2026?

Yes. Under current federal guidance, continuing borrowers are expected to be subject to proration beginning July 1, 2026.

What is happening to Graduate PLUS Loans?

Graduate PLUS Loans will be phased out starting July 1, 2026, for new borrowers. Existing borrowers may continue to borrow under the generally higher limits for the duration of their degree, subject to statutory and aggregate federal borrowing limits.

In recent federal guidance, the Department of Education clarified that Graduate PLUS Loans will count toward the new lifetime borrowing limit once a borrower becomes subject to OBBBA limits. Please speak to your financial aid office with any questions on eligibility.

• Students must have borrowed a federal Direct Loan (Subsidized, Unsubsidized, or PLUS) in their current program before July 1, 2026.
• The eligibility period, while up to three years or the completion of your degree (whichever is sooner), is also limited by the minimum length of your program minus the time you have been enrolled.
• We do not yet have explicit direction from the Department of Education on how exceptions to continuing loans applies to dual-degree programs. Updates will be posted as information becomes available.

What is the new lifetime borrowing limit introduced by the OBBBA?

Under OBBBA, the overall lifetime borrowing limit for federal student loans, excluding Parent PLUS loans, is $257,500. This limit applies to students starting a new program on or after July 1, 2026, and includes all prior federal student loans borrowed by the student, including Graduate PLUS Loans, once the borrower is subject to the new limits.

If I am a current Graduate or Professional student, what does this mean for me?

Based on current federal guidance, the exception for continuing loans may allow students who have borrowed any federal student loan before July 1, 2026, and stay enrolled in the same academic program through June 30, 2026, to continue to borrow under the generally higher limits for the duration of their degree, subject to some limitations. 

Students should be aware that once they are no longer eligible for the continuing borrower exception, their total cumulative federal loan borrowing (including loans borrowed before July 1, 2026, and Graduate PLUS Loans) will be evaluated against the new lifetime aggregate federal borrowing limit.

• Students must have borrowed a federal Direct Loan (Subsidized, Unsubsidized, or PLUS) in their current program before July 1, 2026.
• The eligibility period, while up to three years or the completion of your degree (whichever is sooner), is also limited by the minimum length of your program minus the time you have already completed.
• We also do not yet have clear federal guidance on dual-degree programs. Please speak to your financial aid office with any questions.

Does taking summer classes help me fall under the exception for continuing loans?

Enrollment must be recognized by the institution as part of the academic program. This works only if the summer class is part of your program of study and your coursework/enrollment begins before July 1, 2026.

What should students who have not yet borrowed any federal loan in their current program know?

Students who are considering future borrowing under the Federal Direct Loan Program for your current program, and anticipate needing federal loans above the new caps in future academic years, should consult with their financial aid office to understand how upcoming changes may affect their eligibility. Borrowing decisions should be based on individual financial need and long-term repayment considerations.

How can I establish borrowing eligibility before the new changes take effect?

Carefully consider whether you expect to need to borrow beyond the caps that take effect on July 1, 2026, while completing your current degree. If you decide that you do or will and wish to preserve current federal borrowing limits, undertake the following by April 1, 2026:

• Submit the 2025–2026 FAFSA.
• Complete Loan Entrance Counseling.
• Sign the Master Promissory Note for Direct Unsubsidized Loans.
• Accept Direct Unsubsidized Loan funding via your Banner Student portal.

What are private student loans and how do they differ from federal loans?

Private student loans, or alternative education loans, help bridge funding gaps beyond federal loan limits. Federal eligibility should generally be exhausted before turning to private loans. Private loans do not offer the same borrower protections and repayment options as federal loans.

What should I consider before applying for a private loan?

There are many private lenders, and each may offer different options. Consider:

• Confirming eligibility with lenders
• Borrowing limits (your school’s COA minus aid)
• Cosigner requirements and release options
• Interest rates: fixed vs. variable
• Borrower benefits, such as autopay reductions
• Fees (origination, late payment, returned check)
• Repayment terms, including grace, deferment, and forbearance

Should I apply for Federal Loans or Private Loans first?

Federal loans have attributes not present in private loans and are generally easier to obtain. We recommend using federal loans first and then considering private loans if additional borrowing is needed.

When should I apply for a private loan?

Ideally, apply after committing to a school and receiving your financial aid package so that you may accurately assess your financial needs and the amount you need to borrow.

Why should I wait for my financial aid package before applying for a loan?

Reviewing your financial aid package first helps minimize borrowing needs by accounting for scholarships, grants, and work-study. This strategic approach reduces potential debt.

Can I apply for a loan at any time during the year?

Yes, but because tuition and fees have due dates, you should align your application timing with your school’s deadlines and academic start dates to ensure timely availability of funds.

What tools can help me determine my loan availability?

Use online loan calculators and pre-qualification tools from various lenders. The Free Application for Federal Student Aid (FAFSA) can also provide insight into federal loan options.

Are there actions to improve my credit score before applying?

Yes, you may undertake a number of actions:

• Become an authorized user on a family member’s credit account, if that person has good credit history
• Consider opening a secured credit card or a student credit card
• Pay all bills on time
• Keep utilization on credit lines below 30%
• Avoid opening too many accounts
• Monitor your credit report
• Consider a cosigner

Are the interest rates on private loans higher?

Federal student loan interest rates are fixed and set annually by Congress. Private student loans are unsecured, which may result in higher rates than loans with collateral. Rates reflect your credit score, cosigner status, repayment term, and loan type. Many borrowers work to maintain or improve their credit profile while in school and refinance after graduating and obtaining verifiable employment.

What factors impact the interest rate given to me?

Lenders use a variety of factors that include:

• Credit score
• The existence of a cosigner and that person’s credit
• Repayment length
• Broader economic conditions

What if I am denied a private loan?

If you are denied a private loan, please contact your financial aid office for more information on available resources. 

What is a cosigner?

A cosigner has a secondary legal responsibility if you default on the loan. Having a cosigner often results in a lower interest rate. Many lenders offer cosigner release after a borrower meets specific criteria (e.g., a certain number of timely payments, creditworthiness). Details vary by lender.

Who are the suggested private loan lenders?

Students are free to select any lender and are encouraged to compare rates and terms.