Federal Student Aid Updates

Last updated: March 2026

The One Big Beautiful Bill Act (OBBBA) of 2025 made significant changes to federal student aid. Some provisions were established directly in law, while others still require final regulations and implementation guidance from the U.S. Department of Education (ED). Many updates take effect beginning July 1, 2026, and apply to the 2026-27 FAFSA form and academic year. ED has completed a rulemaking process and is expected to publish proposed rules, followed by a public comment period, before issuing final regulations. Recent updates are provided below.

Loans for Graduate and Professional Students

Graduate PLUS loans are eliminated for new borrowers starting July 1, 2026. 

Beginning July 1, 2026, new federal borrowing limits apply to Federal Direct Unsubsidized Loans for graduate and professional students: 

• Graduate students: $20,500 annual / $100,000 aggregate 
• Professional students: $50,000 annual / $200,000 aggregate 

Federal loan legacy provisions apply, see below.

Definition of Professional Students 

The federal government did not previously have a formal definition for “professional students” for loan purposes. The following degree programs at the University of Nebraska-Lincoln are now identified as professional programs for financial aid purposes and therefore eligible for the higher annual and aggregate loan limits (additional clarification may be provided through final federal regulations and programs may be added once those final rules and clarifications are published): 

•  Law (J.D.)

Borrowing Beyond Federal Limits 

Graduate students who reach their annual federal unsubsidized loan limit and still have remaining educational costs may consider applying for a private (alternative) student loan. Please note that private loans often include mandatory waiting periods and credit requirements, so you are encouraged to apply early if pursuing this option. 

Undergraduate Student and Parent PLUS Borrowing Loan Limits

Beginning July 1, 2026, Parent PLUS loans are subject to new limits: 

• Annual Parent PLUS Loan limit: $20,000 per dependent student 
• Lifetime Parent PLUS Loan limit: $65,000 per dependent student 
  (combined across all parents) 

Federal loan legacy provisions apply, see below.

Federal Loan Legacy Provisions

Some students with federal loans disbursed before July 1, 2026, may be exempt and qualify for limited continuation under prior borrowing rules (legacy provisions). Final eligibility details depend on pending final regulatory guidance. The following legacy provisions are as follows: 

• If you (or a parent on your behalf) borrowed a federal loan prior to July 1, 2026, and are continuing under the same academic program, your loan eligibility will continue to be reviewed under the previous loan rules.  
• Legacy provisions are in effect for a maximum of three years or completion of your degree for the academic program in which you were enrolled prior to July 1, 2026.  
• If at any point during the three year period that you meet legacy provisions, you withdraw from school or change degree programs/major, you can no longer qualify under legacy provisions.  
• Students who qualify under legacy provisions cannot be considered under the new loan rules beginning July 1, 2026.

Loan Repayment

Federal student loan repayment options are being restructured. Specific repayment plan details, payment calculations, and implementation timelines depend on final federal regulations, which have not yet been published. 

Federal Pell Grant Updates 

Pell Grant Ineligibility Based on SAI 

Students whose Student Aid Index (SAI) is at or above twice the maximum Pell Grant for the award year are ineligible for the Federal Pell Grant. 

Full Cost Scholarship Pell Ineligibility 

Students whose total non-federal grants and scholarships are at or above their cost of attendance are ineligible for the Federal Pell Grant. Final implementation details depend on pending final regulatory guidance.

FAFSA Form Updates 

FAFSA and the Student Aid Index (SAI) 

Starting with the 2026-27 FAFSA, certain assets are excluded from the Student Aid Index calculation and should not be reported as FAFSA assets:

• Family-owned businesses with 100 or fewer full-time equivalent (FTE) employees  
• Family farms on which the family resides  
• Family-owned commercial fishing businesses (and related expenses), owned and controlled by the family   

  Review FAFSA instructions to clarify asset reporting requirements.

Planning for Federal Student Aid Updates 

Students and families can prepare for these updates by: 

• Continuing to file the FAFSA every year. The UNL priority deadline is May 1. 
• Reviewing federal loan borrowing options if planning to attend graduate or professional school. 
• Understanding FAFSA asset reporting rules, particularly for families who own small businesses, farms, or commercial fishing operations. 

 For additional information and ongoing federal updates, visit the Federal Student Aid website.