Federal Student Loan Changes

`
What is the “One Big Beautiful Bill Act” and why does it matter for student aid?
P.L. 119-21, also known as the One Big Beautiful Bill Act (OBBBA) or the reconciliation bill, signed July 4, 2025, includes significant reforms to federal student aid programs. It sets new limits for federal student loans (including the phase-out of Grad PLUS), requires loan proration for less than full-time enrollment, and introduces a new income-driven repayment option. While there are no changes to federal student loans for the 2025–26 academic year, changes resulting from the legislation are slated for July 1, 2026. 

What We Do Know: 

  • Graduate PLUS Loans
    Grad PLUS Loans are being phased out under the new law.
    • New graduate and professional students will no longer be eligible to borrow Grad PLUS loans for the 2026-27 academic year.
    • Legacy Provision (interim exception) If a student is currently enrolled in a graduate program at Bard College AND has borrowed a Federal Direct Loan disbursed before July 1, 2026, they may be grandfathered into the current borrowing rules.
    • Students who are grandfathered in may continue borrowing under current rules for up to three additional years, or until they finish their current degree program, whichever comes first. This continuation only applies if the student stays in the same program of study.

    Breaks in enrollment (Leaves Of Absence) WILL affect a student’s eligibility.
  • Parent PLUS Loans
    Starting in the 2026–27 academic year, new limits apply:
    • Parents will be capped at $20,000 per year and $65,000 lifetime in PLUS borrowing per student.
    If you already have Parent PLUS Loans, you may be eligible for grandfathering under the old, uncapped rules. 
  • Graduate Loan Limits - New Aggregate 
    Starting in the 2026–27 academic year, new federal loan limits will apply to graduate students:
    • Graduate student yearly unsubsidized loan limits did not change, it remains at $20,500.
    • The lifetime cap for graduate-level borrowing will be $100,000, not including any undergraduate loans.
  • Undergraduate Federal Loan Limits
     
    • There are no changes for undergraduate loans, although undergraduate loans will count towards the new lifetime limits.
  • Repayment Plans and Public Service Loan Forgiveness (PSLF)
    Repayment Plans:
    For loans first disbursed on or after July 1, 2026, only two repayment plans will be available:
    • Standard Repayment Plan: Fixed monthly payments; 10-, 15-, 20-, or 25-year terms
    • Repayment Assistance Plan (RAP): Income-driven; payments based on income; up to 30-year term

    Public Service Loan Forgiveness:
    The Public Service Loan Forgiveness (PSLF) program will remain in place, and eligible borrowers can continue to work toward forgiveness. The new framework for federal student loan repayment outlined in the new law may make it easier for some borrowers to qualify, especially those with lower incomes. Further details on how PSLF will interact with the new framework are subject to pending rulemaking.

What We Don't know (yet) - Policy Changes that We're Monitoring

  • Loan Proration for Part-Time Students 
    • The bill includes a provision to prorate loan amounts based on enrollment.
    • This could mean that part-time  students (e.g., those enrolled less than full-time) would only be eligible for a portion of the annual loan limit. 
    • Students still need to be enrolled at least half-time (based on their program of study) to be eligible for federal student loans. 

    We are awaiting clarification from ED on how this will be applied to both graduate and undergraduate students.

     

Important Disclaimer:

The information contained on this page is provided by Bard College Student Financial Services to orient students to the changing landscape of federal student loan programs.  While it is based on our good faith understanding of the evolving federal standards, it is not official guidance and should not be regarded by students as definitive. Students should refer to federal governmental sources for official guidance. See studentaid.gov for more information.

Additional Resources:

Contact the Office of Student Financial Services