On July 4, 2025, President Donald Trump enacted the One Big Beautiful Bill Act, introducing significant changes to higher education policy including changes to Federal Direct Loans, repayment options for new and continuing students, and Pell eligibility.
Below is a summary of the changes effective July 1st, 2026.
Federal Direct Loan Changes
What has changed?
- The Graduate PLUS Loan program will be eliminated for new borrowers effective July 1, 2026.
Legacy provision:
- Students who have borrowed any Federal Direct Loan (Unsubsidized or Graduate PLUS) in their current graduate program prior to July 1, 2026 may continue to apply for and borrow Graduate PLUS Loans up to their cost of attendance (minus all other aid).
- Previously borrowed Graduate PLUS loans will count toward a student’s lifetime maximum.
- Valid for up to 3 academic years or until degree completion, whichever comes first.
- Students must remain continuously enrolled Fall/Spring in a minimum of 6 credits per semester at DUNY. A leave of absence will end this eligibility.
What has changed?
- Per-student aggregate limit of $65,000.
- Eligible parents may borrow a maximum of $20,000 per aid year.
- Parents who borrow more than $16,250 per aid year may have limited remaining eligibility available for their student’s 4th year.
- Effective July 1, 2026.
Legacy provision:
- Students who have borrowed any Federal Direct Loan (Subsidized, Unsubsidized) or parents who borrowed a Federal Parent PLUS loan (for this student) before July 1, 2026 may continue applying for and borrowing these loans up to the student’s cost of attendance (minus all other aid).
- Valid for up to 3 academic years or until degree completion, whichever comes first.
- Students must remain continuously enrolled Fall/Spring in a minimum of 6 credits per semester at DUNY. A leave of absence will end this eligibility.
What has changed?
- Graduate students may borrow a maximum of $20,500 per year in Direct Unsubsidized Loans.
- Lifetime aggregate limit of $100,000.
- Professional students may borrow a maximum of $50,000 per year in Direct Unsubsidized Loans.
- Lifetime aggregate limit of $200,000.
- Undergraduate loans do not count toward the graduate aggregate limits.
- Effective July 1, 2026.
Legacy provision:
- Students who borrowed a Federal Direct Loan before July 1, 2026 may continue to borrow up to their cost of attendance (minus all other aid).
- Valid for up to 3 academic years or until degree completion, whichever comes first.
- Students must remain continuously enrolled Fall/Spring in a minimum of 6 credits per semester at DUNY. A leave of absence will end this eligibility.
What has changed?
- Institutions must prorate annual loan eligibility based on a student’s enrollment level.
- A student enrolled half-time would only be eligible for 50% of their annual loan eligibility.
- Effective for all loans disbursed for the 2026-2027 award year.
What does this mean?
- Federal loans are now treated as annual loans tied to enrollment for the full academic year.
- Loans for standard academic year enrollment (Fall and Spring) must be split evenly across both terms.
- No more than 50% of a student’s annual loan eligibility may be disbursed for a single term.
- If enrollment changes mid-year, remaining loan disbursements must be adjusted in the following semester to reflect updated enrollment.
- Undergraduate students enrolled in fewer than 24 combined credits across Fall and Spring will have their loans adjusted in the second semester.
Free Application for Federal Student Aid (FAFSA) and Pell Grant Changes
What has changed?
- Family-owned assets, such as small businesses and primary-residence farms, are excluded from Student Aid Index (SAI) calculations.
What does this mean?
- SAI is a number calculated from FAFSA information that determines aid eligibility.
- A lower SAI means higher financial need.
- Excluding these assets could increase a student’s aid eligibility.
What has changed?
- Students who receive grants or scholarships from non-federal sources that cover their full cost of attendance are ineligible to receive a Pell Grant.
- Students are no longer eligible for a Pell Grant once their SAI equals or exceeds twice the maximum Pell award.
What does this mean?
- The maximum Pell Grant for the 2026-2027 academic year is currently set at $7,395.
- Students with an SAI greater than or equal to $14,790 are ineligible.
Student Loan Repayment
What has changed?
- Borrowers who take out new loans on or after July 1, 2026 will have 2 repayment plan options: the Standard Repayment Plan or the Repayment Assistance Plan (RAP).
- If no plan is chosen, borrowers will be placed in the Standard Repayment Plan automatically.
What does this mean?
- All loans must be repaid under the same repayment plan.
- Borrowers with loans from before July 1, 2026 who borrow again after that date will be limited to the new Standard Repayment Plan or RAP.
- Standard Repayment Plans have fixed payments that can span 10-25 years.
- RAP is income-based, with forgiveness after longer terms.
What has changed?
- Borrowers who do not take out new loans on or after July 1, 2026 may continue using their current repayment plans.
- Students may remain in or switch between existing income-driven plans through July 1, 2028.
What does this mean?
- Borrowers currently in the Income Contingent Repayment (ICR), Pay As You Earn (PAYE), or Savings on a Valuable Education (SAVE) plan must choose a new repayment plan (Standard or RAP) by July 1, 2028.
- If no choice is made, borrowers will automatically be placed in RAP.
What has changed?
- Economic hardship and unemployment deferments will no longer be available, effective July 1, 2027.
What does this mean?
- Borrowers with loans from on or before July 1, 2027 may continue to use these deferment options under current rules.
- Once those loans are paid off, these deferments will no longer be available.