Understanding Federal Student Loan Changes Under OBBBA
Updated May 6, 2026
Beginning July 1, 2026, new federal legislation known as the One Big Beautiful Bill Act (OBBBA) will introduce significant changes to federal student loans and repayment programs beginning with the 2026-2027 academic year. These changes may affect how much students and families can borrow, what repayment plans are available after graduation, and how aid works for graduate students and parents.
We understand that changes to financial aid can feel overwhelming, especially when you are trying to plan for college or graduate school. This page is designed to help explain what is changing, who may be impacted, and what steps students and families can take moving forward.
Please note that federal agencies are still finalizing guidance related to this legislation. While we will continue updating this page as new information becomes available, official guidance from the U.S. Department of Education and Federal Student Aid should always be considered the final authority.
If you have specific questions, reach out to a USM Financial Aid representiatve.
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What’s Changing Beginning in 2026?
Starting with the 2026–2027 academic year, several federal student loan rules will change. Some of these updates will impact how much students and families can borrow, while others will affect repayment after graduation.
Here are some of the biggest changes students and families should be aware of:
- Federal student loans may no longer cover the full cost of attendance.
- Parent PLUS loans will have new annual and lifetime borrowing limits.
- Graduate PLUS loans will be eliminated for new borrowers.
- Students enrolled less than full-time may receive reduced annual loan amounts based on the number of enrolled credits.
- Federal repayment plan options will change beginning in 2026 and again in 2028.
- Some current borrowers who are currently enrolled may qualify for temporary “legacy” or “grandfathered” protections for existing loans.
While these changes may sound intimidating, many currently enrolled students may still qualify for existing borrowing rules if they meet certain eligibility requirements before July 1, 2026.
Because every family’s situation is different, we strongly encourage students and parents to speak directly with USM Financial Aid to better understand their individual options.
Changes to Loan Repayment Plans
OBBBA will also change how federal student loan repayment works after graduation.
Beginning July 1, 2026
Borrowers who receive a new federal loan on or after July 1, 2026, will have access to only two repayment plans:
- Tiered Standard Repayment Plan
- Repayment Assistance Plan (RAP)
Students who borrowed federal loans before July 1, 2026 and take no new loans after July 1, 2026, may still continue using current repayment plans such as SAVE, PAYE, ICR, IBR, Graduated, or Extended repayment until June 30, 2028.
Beginning July 1, 2028
Several existing repayment plans, including SAVE, PAYE, and ICR, will officially sunset. Borrowers enrolled in those plans will need to move into a remaining repayment option.
Borrowers who do not choose a repayment plan will automatically be placed into the Repayment Assistance Plan (RAP).
How Enrollment Status May Affect Loans
Beginning with the 2026–2027 award year, students who attend less than full-time may see reductions to their annual federal loan eligibility.
In practical terms, this means:
- Loan eligibility may be adjusted before each disbursement.
- If a student drops below full-time enrollment, future loan disbursements could be reduced.
- Students enrolled less than full-time for an academic year may receive lower annual loan limits overall.
Parent PLUS loans are not affected by these enrollment-based reductions.
Parent PLUS Loan Changes (Undergraduate Students)
For many families, Parent PLUS loans--which are open to undergraduate students--have historically helped bridge the gap between financial aid and the total cost of attendance. Beginning July 1, 2026, new borrowing caps will be introduced for new Parent PLUS borrowers.
New Parent PLUS Loan Limits
- $20,000 annual limit per dependent student
- $65,000 lifetime limit per dependent student
Previously, parents could borrow up to the full cost of attendance. These new caps represent one of the largest changes in the new regulations.
Legacy Eligibility for Current Students
Some currently enrolled students may qualify for a temporary grandfathering provision.
A family may continue borrowing under the current Parent PLUS rules if:
- The student was enrolled as of June 30, 2026, and
- At least one Direct Loan had already been disbursed for the student before July 1, 2026.
Under this provision, families may continue borrowing under the previous rules for up to three additional academic years, or until the student completes their degree, whichever comes first.
However, students who withdraw and later return to school may lose eligibility for these grandfathered benefits.
Connect with USM Financial Aid for questions regarding Parent PLUS loans.
Graduate Student Loan Changes (Master's and Doctoral students)
Graduate students (students in master's or doctoral programs) will also experience major changes under OBBBA.
Graduate PLUS Loans Will End for New Borrowers
Beginning July 1, 2026, the Graduate PLUS Loan program will no longer be available to new borrowers.
Students currently enrolled may still qualify for temporary legacy eligibility if:
- They were enrolled in their program as of June 30, 2026, and
- At least one Direct Loan had already been disbursed before July 1, 2026.
Eligible students may continue borrowing under current rules for up to three academic years, or until they complete their degree program. Contact USM financial aid with questions regarding Grad PLUS loan eligibility.
New Graduate Borrowing Limits
OBBBA also introduces new annual and lifetime borrowing caps for graduate students:
- $20,500 annual limit and $100,000 aggregate limit for graduate students
Students considering graduate or doctoral education are encouraged to plan ahead and discuss financing strategies with USM Financial Aid as early as possible.
Frequently Asked Questions
Do these changes affect private student loans?
No. These changes apply only to federal student loan programs.
What is an aggregate loan limit?
An aggregate limit is the total amount a borrower can receive in federal student loans over their lifetime. Once that limit is reached, additional federal borrowing is no longer available unless part of the balance is repaid.
I am planning to borrow federal loans for the first time. What should I do?
We encourage you to connect directly with Student Financial Services to discuss your eligibility, borrowing options, and long-term financial planning.
Understanding your options now can help you make informed decisions before these federal changes take effect.
Helpful Resources
Contact USM Financial Aid
Email: finaid@stmary.edu
Phone: 913-758-4303
Maria Griese
Financial Aid Counselor,
students with last names A-K
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Email: Maria.Griese@stmary.edu
Phone: 913-758-6312
Heather Jones
Financial Aid Counselor,
students with last names L-Z
Email: Heather.Jones@stmary.edu
Phone: 913-758-6269
Other Helpful Resources