On July 4, 2025, the One Big Beautiful Bill Act was signed into law, resulting in changes to some federal student aid programs. Some of these changes went into effect immediately, while others will go into effect at a later date.

The One Big Beautiful Bill Act Updates page will continue to be updated as new information becomes available.

Please visit the Federal Student Aid website to get the latest information on changes affecting recipients of federal student aid, including borrowers. Their One Big Beautiful Bill Act Updates page will continue to be updated as new information becomes available.

At-a-Glance Comparison

The table below provides a side-by-side summary of the key changes for quick reference.

Program / Rule Category 2025–2026 Academic Year (Current Rules) Starting 2026–2027 Academic Year (Changes)
Parent PLUS Loans Can borrow up to the full cost of attendance (minus other aid received) with no borrowing caps New borrowers will have annual and lifetime borrowing caps: approx. $20,000/year and $65,000 total aggregate limit
Graduate PLUS Loans Available to cover remaining education costs Eliminated for new borrowing after June 30, 2026
Graduate Loan Limits
(Direct Unsubsidized)		 Higher and more flexible borrowing Lower capped limits: fixed annual and total amounts
Current Students
(already enrolled before the rule change)		 Continue borrowing under current rules May be granted “legacy” status for a limited time
Pell Grants Based on current FAFSA® calculations (SAI) SAI of $14,790 or higher will no longer be eligible for Pell
Repayment Plans
(Income-Driven and Standard)		 Multiple income-driven repayment options Fewer/modified repayment options

Federal Student Aid Changes for 2026-2027

Significant changes to federal student loans and grants will take effect on July 1, 2026. The following provides additional detail on these changes:

  • Beginning July 1, 2026, loan limits will be prorated depending on enrollment level, similar to grant funding. This means new borrowers enrolled less than full time will only be able to borrow loan amounts in direct proportion to their credit load, with a minimum half-time enrollment requirement.
  • Because dropping below full-time status will immediately reduce how much federal aid you are eligible to receive, it is highly recommended that you contact the financial aid office before adjusting your course schedule.

What’s Changing?

  • Federal Direct Parent PLUS loans for new borrowers will be limited to $20,000 a year with a lifetime aggregate of $65,000, as of July 1, 2026.
  • Fewer repayment plans will be available for all new loans disbursed after July 1, 2026.

Why Borrowing Now Matters?

By borrowing before these changes take effect, you’ll be considered a “legacy borrower”. This status allows you to keep these benefits:

  • Federal Parent PLUS Loans without a yearly loan or lifetime aggregate limit. (New borrowers will be limited to a Federal Direct Parent PLUS loan of $20,000 a year.)
  • Protection from stricter repayment structures and reduced borrowing options that will apply to new students starting in 2026–2027.

Note: Fewer repayment plans will be available for all new loans after July 1, 2026.

Important Reminders:

To take advantage of Federal Direct Loans:

  1. You must file your 2026-2027 FAFSA® (if you haven’t done so already).
  2. Accept the terms and conditions of your loan: Complete Entrance Counseling and Master Promissory Note (MPN).

If you borrow in time to gain legacy status, your benefits as a legacy borrower will extend to all borrowing until July 1, 2029, or until you complete your program, whichever comes first.

It is important to note that these changes will not affect the borrowing rules for Federal Direct Subsidized and Federal Direct Unsubsidized Loans. The greatest impact will be felt by undergraduates who have not yet borrowed under the current system.

What’s Changing?

  • Federal Direct Graduate PLUS Loans will be eliminated for new borrowers on July 1, 2026.
  • New borrowing aggregate limits will be imposed:
    • $100,000 for graduate students (lifetime)
    • $200,000 for professional students in qualifying programs (lifetime)
  • Fewer repayment plans will be available for all new loans after July 1, 2026.

Why Borrowing Now Matters?

Graduate and professional students who borrow before these changes take effect (July 1, 2026) will be considered “legacy status” borrowers. They will retain access to the current loan programs, repayment options and borrowing flexibility that will no longer be available to new borrowers after 2026.

Legacy Status Benefits:

  • Continued access to the Federal Direct Unsubsidized Loan program up to $20,500 per year.
  • Continued access to Federal Graduate PLUS Loans with current borrowing limits/caps.
  • Greater flexibility in financing your graduate education compared to future borrowers.

Important Reminders:

To take advantage of Federal Direct Loans:

  1. You must file your 2026-2027 FAFSA® (if you haven’t done so already).
  2. Accept the terms and conditions of your loan: Complete Entrance Counseling and Master Promissory Note (MPN).

If you borrow in time to gain legacy status, your benefits as a legacy borrower will extend to all borrowing until July 1, 2029, or until you complete your program, whichever comes first.

What’s Changing?

  • Annual borrowing cap: Parents will be limited to borrowing up to $20,000 per year per dependent student.
  • Lifetime borrowing cap: Parents may borrow a maximum of $65,000 total per dependent student.
  • No unlimited borrowing: Previously, Parent PLUS loans could cover the full cost of attendance minus other aid. Starting July 1, 2026, this will no longer be the case.
  • Repayment options: Parent PLUS borrowers with loans issued after July 1, 2026 will lose access to income-driven repayment plans unless they consolidate before that date.

What Does This Mean for Families?

Parents who receive a loan disbursement before July 1, 2026, will be considered “legacy borrowers” and will have continued access to Federal Direct Parent PLUS Loans with no aggregate current borrowing limits.

Important Reminders:

To take advantage of Federal Direct Loans, your student must:

  1. File their 2026-2027 FAFSA® (if they haven’t done so already).
  2. Both you and your student must accept the terms and conditions of your loan: Complete Entrance Counseling and Master Promissory Note (MPN).
  3. Receive a disbursement before June 2026.

The Federal government provided additional funding to continue running the Pell Grant program.

  • Students with a very high Student Aid Index (SAI) may no longer qualify. Any student with an SAI higher than $14,790 (twice the maximum Pell amount) is not eligible for Pell funding. will not be Pell eligible.
  •  Students receiving scholarships that cover their full cost of attendance won’t be eligible for Pell.

Going forward, any student enrolled at a university with part-time status (fewer than 12 credits), regardless of graduation status, will have their loans reduced based on the number of credits they are taking.

  • New proration rules will apply to all incoming students beginning in the 2026–2027 academic year, based on enrolled credits.
  • All students enrolled in fewer than 12 credits (less than full-time) will have their loans prorated according to the number of credits.
  • Proration may occur either during the semester of part-time study or in the following semester.

We are awaiting further details and will update as more information is available.

These new payment plans will be applicable to all borrowers who take a new loan on or after July 1, 2026.

  • Former borrowers who are not taking new loans and are currently enrolled in a plan that will be phased out (Graduated, Extended, ICR, PAYE and IBR) may stay in these plans for the remainder of their repayment. Providing they do not borrow a new loan.
  • New Repayment Assistance Plan (RAP):
    • Payments based on income (1–10% of Adjusted Gross Income).
    • $10 minimum payment, with family size adjustments.
    • 30-year repayment period.
    • New Parent PLUS loans cannot be repaid in RAP; it would be an ineligible loan, which would be paid separately.
    • No cap on monthly payments.
  •  Standard repayment plan updated: fixed terms of 10, 15, 20, or 25 years.
  • Current borrowers keep existing options but may opt into RAP.
  • By 2028, older repayment plans will sunset and RAP/standard plans will be the default.

These provisions are all applicable as of July 1, 2027.

  • Borrowers may rehabilitate a defaulted loan twice. The minimum payment is $10, and borrowers must make nine (9) on-time, consecutive payments.
  • Economic hardship and unemployment deferments will be phased out by 2027.
  • Forbearance limited to 9 months within any 2-year period (instead of 12 months at a time).

Students who take a leave of absence (LOA) or withdraw from their program on or after July 1, 2026, will lose their legacy borrowing protections.

What This Means for Metropolitan College of New York (MCNY) Students

  1. Legacy borrowers (those who take out loans before July 1, 2026) keep current borrowing rules for up to 3 years or until completing their program. Minus the graduate aggregate limit.
  2. Students should plan ahead and explore external funding options (state/federal aid, private loans and scholarships and employer reimbursement).

Additional OBBBA Resources