Federal Loan Updates for 2026-27
Important changes to federal student loan programs are coming.
Legislation recently passed by Congress, known as the One Big Beautiful Bill Act (OB3), will result in significant modifications to the Federal Direct Loan program beginning with the 2026–2027 academic year (effective July 1, 2026).
These changes primarily affect graduate students and parents of undergraduate students. If you are planning to utilize federal loans to finance your education in 2026–27 or later, we encourage you to review these updates carefully to understand how they may impact your financial plan.
Federal Student Aid has published updates and FAQs. You can view the updates on their OB3 Updates website.
For Graduate Students
The most significant changes concern the Graduate PLUS Loan program and new lending limits for Direct Unsubsidized Loans.
Elimination of Grad PLUS for New Borrowers
Effective July 1, 2026, the Federal Direct Graduate PLUS Loan program will be eliminated for new borrowers. This means you will no longer be able to borrow up to the full Cost of Attendance (COA) minus other aid using federal loans alone, unless you qualify for the “Legacy Provision” (see below).
New Loan Limits
The legislation establishes new annual and aggregate (lifetime) limits for Direct Unsubsidized Loans, distinguishing between “Graduate” and “Professional” students.
- Graduate Students (Master’s and DSW):
- Annual Limit: Remains $20,500.
- Aggregate Limit: Capped at $100,000 (does not include loans borrowed as an undergraduate).
Legacy Provision (Grandfathering)
You may continue to borrow under the legacy provision (including Grad PLUS Loans up to the Cost of Attendance) for up to 3 additional years if you meet ALL of the following criteria:
- You borrowed a federal student loan (Subsidized, Unsubsidized, or Grad PLUS) for that specific program before July 1, 2026.
- You are enrolled in the same credentialed program in 2026–27 that you were enrolled in prior to July 1, 2026.
- You are within the standard published length of your program.
If you change programs or start a new degree after July 1, 2026, you will be subject to the new limits.
For Parents of Undergraduate Students
The Parent PLUS Loan will remain available but with new limits on borrowing amounts.
New Annual & Lifetime Limits
Starting in the 2026–27 academic year, Parent PLUS Loans will be limited to:
- Annual Limit: $20,000 per student, per year.
- Aggregate Limit: $65,000 per student total.
Currently, parents can borrow up to the full Cost of Attendance minus other aid. This new limits mean that some families may need to look for alternative financing such as private loans.
Legacy Provision for Parents
Parents may continue to borrow under legacy provisions (up to the full Cost of Attendance) for up to 3 additional years if:
- The student they are borrowing for is enrolled in the same program they were attending prior to July 1, 2026.
- Either the student or the parent borrowed a Parent PLUS loan for that student prior to July 1, 2026.
New Lifetime Limit
The legislation introduces a total aggregate lifetime limit of $257,500 for all federal student loans combined. This limit applies to the total outstanding principal balance of all your federal loans (Subsidized, Unsubsidized and Graduate PLUS loans).
- Note: This aggregate limit excludes Parent PLUS loans.
How to Prepare
We understand these changes may create uncertainty as you plan for future years. Here are steps you can take now:
- Check Your Loan History: Log in to StudentAid.gov to view your current total loan balance.
- Understand Your Status: Determine if you will likely qualify for the Legacy Provisions. If you are currently enrolled and have previously borrowed federal loans, you will likely qualify for legacy provisions.
- Plan for the Gap: If you anticipate your costs will exceed the new federal student loan limits (especially for new graduate students or parents), begin researching other options such as private student loans, personal savings, etc.
We are here to help you. Please reach out to us if you have any questions.
Student Financial Services is closely monitoring federal guidance. We will update this page as final regulations are published by the Department of Education.