Federal Aid Changes: What to Expect from the Reconciliation Bill - "One Big Beautiful Bill Act"
Signed into Law: July 4, 2025
The recently enacted "One Big Beautiful Bill Act" (OBBBA) brings significant changes to federal student aid. While we await further guidance from the U.S. Department of Education, many provisions are set to take effect starting July 1, 2026.
To help you stay informed, the Office of Undergraduate Financial Aid has summarized the key updates below. Please note details and timelines may shift as implementation guidance becomes available. We remain committed to keeping you updated as new information emerges - please continue to check back for new information.
Key Highlights
- New federal loan limits and repayment options go into effect July 1, 2026 (see below
for details)
- No changes to aggregate undergraduate loan limits
- Undergraduate PLUS Loans will be capped at $20,000 per year, with a $65,000 lifetime limit per dependent student.
- All new federal student loan borrowers will have a lifetime aggregate limit for all undergraduate, graduate, and professional federal loans of $257,500, regardless of whether earlier loans have been repaid or forgiven (not including Parent PLUS loans).
- Repayment plans will include only two options:
- Standard Repayment Plan
- Repayment Assistance Plan (RAP) - replacing all current income-driven repayment (IDR) plans
- Legacy provisions will protect many current borrowers from changes
- If you meet both criteria below, you may qualify for the legacy provision:
- You began enrollment in a degree-seeking undergraduate program prior to June 30, 2026, and
- You have borrowed federal loans under your current undergraduate program.
- If you meet both criteria below, you may qualify for the legacy provision:
Current Undergraduate Students (enrolled prior to July 1, 2026)
This section applies to students who are currently enrolled in an undergraduate program prior to July 1, 2026.
If you meet both criteria below, you may qualify for the legacy provision:
- You began enrollment in a degree-seeking undergraduate program prior to June 30, 2026, and
- You have borrowed federal loans under your current undergraduate program.
Students who meet these criteria may continue under previous federal loan rules for the expected time to complete their program or up to three academic years, whichever comes first.
Students who do not meet the criteria for the legacy provision should refer to the New Undergraduate Students section below.
I’m a student borrower, all my loans were disbursed before July 1, 2026, and I don’t plan to receive new loans on or after July 1, 2026.
There are no changes to the loan limits for you, since you don’t intend to receive more loans. If you do determine that you need more aid or choose to consolidate your loans, you should carefully review the section about receiving new loans on or after July 1, 2026. Because all your loans are first disbursed before July 1, 2026, you’ll retain access to many of the existing fixed payment repayment plans and income-driven repayment plans.
I’m an undergraduate student borrower with loans disbursed before July 1, 2026, and I do plan to receive new loans on or after July 1, 2026.
There are no changes to how much federal loans an undergraduate student may borrow. However, students enrolled less than full-time will receive reduced loan eligibility proportional to their enrollment level. See the loan proration page for more details or contact your Financial Aid Counselor to discuss further.
- Annual loan limit $5,500-$12,500 based on year in school and dependency status
- Aggregate loan limit $31,000-$57,500 based on dependency status
Can current Parent PLUS borrowers continue under existing rules?
Yes. Parents who borrowed Parent PLUS loans for a student before July 1, 2026, may continue borrowing under current limits for up to three additional years or until the student completes the program, whichever comes first.
- If you do qualify for the exception, the maximum annual amount you may borrower is equal to your child’s cost of attendance minus other aid that your child received.
- If you don’t qualify for the exception (including if you previously qualified for the exception but took an action that cancels the exception), then you’ll have reduced borrowing eligibility starting on July 1, 2026. Dependent undergraduate students will be able to receive up to $20,000 annually received by all parents, with an overall aggregate amount of $65,000 per student. After reaching the limit, parents won’t be permitted to receive additional parent PLUS loans.
What happens if I change majors or take a break from enrollment?
Changing programs or breaking continuous enrollment may cause you to lose legacy status and become subject to the new, lower Parent PLUS borrowing limits.
New Undergraduate Students (Loans first disbursed July 1, 2026 or later)
This section applies to students who plan to begin an undergraduate program on or after July 1, 2026, as well as students who do not meet the criteria for the legacy provision.
I’m a new undergraduate student borrower, and all my loans will first be disbursed on or after July 1, 2026.
Your annual and aggregate loan limits remain the same as they were before July 1, 2026.
- Annual loan limit $5,500-$12,500 based on year in school and dependency status
- Aggregate loan limit $31,000-$57,500 based on dependency status
- For all Federal Direct student loans, there is a lifetime aggregate (maximum) borrowing limit of $257,500. This lifetime cap applies across all levels of study (undergraduate and graduate/professional combined) and excludes Parent PLUS loans
What is changing with Parent PLUS Loans and when?
Beginning July 1, 2026, new Parent PLUS Loan borrowers will face two new limits:
- $20,000: the annual loan limit per dependent student each academic year
- $65,000: the aggregate (lifetime) loan limit per dependent student
How does the $65,000 aggregate limit affect borrowing?
If parents borrow the annual maximum for a four-year undergraduate program, they may reach the $65,000 cap before the student finishes their degree, leaving no additional Parent PLUS Loan eligibility.
Loan Proration
Starting July 1, 2026, for both undergraduate and graduate students enrolled less than full-time, federal law requires institutions to prorate annual loan amounts based on their enrollment status. This means your loan eligibility will be reduced proportionally if you are enrolled less than full-time. This rule applies to all students, including those who qualify under the Legacy Provision.
For examples of loan proration for undergraduate students, please visit the Undergraduate Loan Proration page.
Additional Updates
Pell and Work Study Changes
- Students who receive grants or scholarships from non-federal sources covering their entire cost of attendance (COA) are ineligible to receive a Pell Grant, even if otherwise eligible for the program. Loyola's policy requires the reduction of institutional awards to prevent over-awarding; VA benefits are excluded from this limitation.
- Starting in the 2026–27 academic year, students will no longer be eligible for a Pell Grant if their Student Aid Index (SAI) is greater than twice the maximum Pell award for that year. An applicant with an SAI equal to or greater than $14,790 for the award year is ineligible for a Pell Grant.
- Requires that foreign income be included in the adjusted gross income used to calculate Pell grant eligibility
What changes are being made to Pell Grants for students with full funding (such as merit scholarships, athletic aid, institutional grants, or private scholarships)?
Students whose cost of attendance is fully covered by non-federal aid and who are eligible for a Pell Grant will see their institutional or non-federal aid adjusted when the Pell Grant is applied. This change allows the Pell Grant to be included in the students' financial aid package while keeping total aid within the federally allowed cost of attendance.
Can you give an example of the new Pell Grant rule for fully funded students?
For example, if a Pell-eligible student’s athletic aid already covers the full cost of attendance, the student’s institutional or athletic aid will be reduced by the amount of the Pell Grant when the Pell Grant is added to the financial aid package.
Will these changes affect Federal Work-Study?
No, Loyola will continue to determine Federal Work-Study eligibility and award amounts based on available institutional policies and federal funding.
What Should Undergraduate Students Do Now?
Here's how you can plan ahead for these changes:
- Check your borrowing history by logging into studentaid.gov to check your total lifetime borrowing.
- Consult with the Financial Aid Office before you make any changes to your program, or enrollment.
- Schedule a meeting with your Financial Aid Counselor if you are dropping any classes after the add/drop period as this could cause your Federal Loans to be prorated.
- Explore scholarships and other alternative funding options.
- Plan your repayment strategy before borrowing new loans under the new rules.
- Stay informed as federal guidance evolves. View more information about the One Big Beautiful Bill Act at https://studentaid.gov/announcements-events/big-updates.