Important Federal Loan Changes Effective July 1, 2026
Recent federal legislation, commonly referred to as the “One Big Beautiful Bill Act,” includes significant changes to the Federal Direct Loan programs beginning July 1, 2026. These changes impact Parent PLUS Loans and eliminate the Graduate PLUS Loan program for new borrowers.
The U.S. Department of Education is expected to release additional regulatory and implementation guidance prior to the effective date. The information below reflects key highlights of the upcoming changes based on current federal law and available guidance and will be updated as further clarification becomes available.
Parent PLUS Loan
Beginning July 1, 2026, federal borrowing limits will apply to new Parent PLUS Loans.
New Parent PLUS Borrowers
(First Parent PLUS Loan disbursed on or after July 1, 2026)
- $20,000 annual limit per dependent student
- $65,000 lifetime (aggregate) limit per dependent student
Legacy Parent PLUS Borrowers
(First Parent PLUS Loan disbursed before July 1, 2026)
- May continue borrowing up to the student’s full Cost of Attendance (COA) minus other aid for the lesser of three academic years or the student’s expected time to credential
- Dependent student must remain continuously enrolled in the same program
Graduate PLUS Loan
The Graduate PLUS Loan Program will be eliminated for new borrowers beginning July 1, 2026.
New Graduate Borrowers
(No Graduate PLUS Loan prior to July 1, 2026)*
- Will not have access to Graduate PLUS Loans
- May borrow only up to the $20,500 annual limit of the Direct Unsubsidized Loan
Legacy Graduate Borrowers
(Received a Graduate PLUS Loan before July 1, 2026)*
- May continue borrowing up to full Cost of Attendance (COA) minus other aid for the lesser of three academic years or the expected time to credential
- Must remain continuously enrolled in the same program
*For students who were enrolled in a program of study as of June 30, 2026, borrowing any type of Direct Loan for that program prior to July 1, 2026, qualifies the student for the graduate PLUS loan legacy provision.
Frequently Asked Questions
Who is considered a "legacy borrower"?
A legacy borrower is a parent or graduate student whose first PLUS Loan disbursement occurred before July 1, 2026 and who remains continuously enrolled and eligible under federal guidelines.
What does "continuous enrollment" mean?
For graduate borrowers, it generally means remaining enrolled in the same program, at the same institution, without a break that would reset federal eligibility. For Parent PLUS borrowers, it means your dependent student must remain enrolled in the same program, at the same institution, without a break that would reset federal eligibility. Students considering a leave of absence should contact our office to discuss how it may affect eligibility.
What if my costs exceed the new Parent PLUS limits?
Families may need to consider:
- Monthly payment plans
- Private educational loans (credit-based)
- Other financing options
These updates reflect current federal legislation and guidance regarding changes to the Federal Direct Loan program effective July 1, 2026. Additional regulatory clarification may be issued prior to implementation. This page will be updated as new federal guidance becomes available.