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 annual loan limits for part-time enrollment, Parent PLUS Loan limits, and eliminates the Graduate PLUS Loan program for new borrowers.
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
Existing (Legacy) Parent PLUS Borrowers
(First Parent PLUS Loan, or Student’s Direct 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 type (i.e. Bachelor’s degree).
Graduate PLUS Loan
The Graduate PLUS Loan Program will be eliminated for new borrowers beginning July 1, 2026.
New Graduate Borrowers
(No Direct Loan disbursed 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
Existing (Legacy) Graduate Borrowers
(First Direct Loan for the same program of study disbursed 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
Existing and Future Undergraduate Borrowers
- Subsidized and Unsubsidized loan limits remain the same for undergraduate borrowers.
- If you enroll less than full-time, or drop a course throughout the semester that reduces your enrollment to part-time, the amount you can borrow for the semester, or subsequent semester, may be reduced.
- Borrowers with new loans made on or after July 1, 2026 will no longer have access to the current income-driven repayment plans (IBR, PAYE, SAVE) and will have access to the new Repayment Assistance Program (RAP).
Frequently Asked Questions
Who is considered a "legacy borrower"?
Undergraduate Students and Parent PLUS Borrowers
An undergraduate student will qualify as a Legacy Borrower, granting the limited exception to allow your parent to receive a Direct PLUS Loan for parents if they
- were enrolled in a program of study at an institution as of June 30, 2026;
- received at least one Direct Loan, or your parent received a Direct PLUS Loan on your behalf, for such program of study, before July 1, 2026; and
- are enrolled at the same institution and are seeking the same credential after July 1, 2026, and have not ceased to be enrolled seeking the same credential at the same institution at any point on or after July 1, 2026.
“Credential” refers to the degree you’re seeking, for example, a bachelor’s or associate degree. You can’t change credential level and maintain eligibility for the exception, but you can change majors within your credential.
Graduate and Professional Students
A graduate student qualifies as a Legacy Borrower if they
- were enrolled in a program of study at an institution as of June 30, 2026;
- received at least one Direct Loan for such program of study prior to July 1, 2026; and
- are currently enrolled at the same institution in the same program of study and have not ceased to be enrolled in the same program at the same institution at any point on or after July 1, 2026.
What if my costs exceed the new 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.