Federal Student Aid Updates

Last updated: June 2026

The One Big Beautiful Bill Act (OBBBA) of 2025 (sometimes referred to as the Working Families Tax Cuts Act) made significant changes to federal student aid. Some provisions were established directly in law, while others required final regulations and implementation guidance from the U.S. Department of Education (ED). Many updates begin July 1, 2026, and apply to the 2026-27 FAFSA form and academic year. ED has completed its rulemaking process and published final rules and regulations.

Loans for Graduate and Professional Students

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

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

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

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 federal student loan purposes. The following degree programs at the University of Nebraska-Lincoln are identified as professional programs for financial aid purposes and therefore eligible for the higher annual and aggregate loan limits: 

•  Law (J.D.)
• Educational Psychology (Ph.D.)
  • Specializations in Counseling Psychology or School Psychology

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 (interim exception) apply, see below.

Federal Loan Legacy Provisions (Interim Exception)

Some students with federal loans disbursed before July 1, 2026, may be exempt and qualify for limited continuation under prior borrowing rules (legacy provisions/interim exception). These 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. This timeframe could be shorter if you have less than three years remaining in the official length of the program.  
• If at any point during the time you meet legacy provisions, you withdraw from school or change graduate degree program*, or exceed the official program length, 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.

*Note: For undergraduate students, remaining in a baccalaureate program is considered the same degree program.

Enrollment-Based Loan Schedule of Reduction

Beginning with the 2026–27 academic year, federal student loan limits will be based on how many credits you take across the academic year. In the past, students enrolled at least half-time could often receive the full annual loan limit. Starting in 2026-27, loan eligibility will be adjusted based on your enrollment level.

What this means for you:

• Full-time students (based on each semester and overall academic year enrollment) may qualify for the full annual loan amount
• Part-time students will qualify for a reduced loan amount based on their enrollment
• Changes to your enrollment, even from one semester to the next, may affect your loan eligibility for the entire academic year

⚠️ Important to know

Enrollment for student loan eligibility is now reviewed across the full academic year. For example, if you reduce your credits in the fall, it may lower the total loan amount you are eligible to receive, including what is available for the spring term.

Loan Repayment

Federal student loan repayment options are being restructured. New repayment options for federal student loans borrowed on or after July 1, 2026 include:

• Standard Repayment Plan: 10 to 25 years, depending on how much you borrowed.
• Repayment Assistance Plan (RAP): An income-based plan that charges 1% to 10% of your Adjusted Gross Income (AGI), with forgiveness after 30 years.

Note: Once you being using RAP, you cannot change back to the Standard Plan.

If you borrowed Direct Loans or Parent PLUS Loans before July 1, 2026, you can continue to use the legacy repayment plans until your servicer transitions you to a new option, possibly until July 1, 2028.

For more information, visit One Big Beautiful Bill Act Updates | Federal Student Aid.

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.

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.