Federal Student Aid Changes With the One Big Beautiful Bill Act
Federal Student Aid is changing significantly for students and parents beginning with the 2026-27 aid year due to the passage of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025.
These changes set new annual and aggregate federal loan limits for both students and parents, require loan proration for less than full-time enrollment and impact eligibility for certain federal loan programs.
You are encouraged to visit the Federal Student Aid (FSA) website for the latest information.
Effective Date: This applies to all federal loans processed for the 2026-2027 aid year. For Harrisburg University this means all loans starting with the Fall 2026 semester.
Important Changes Under the OBBBA
Federal loan eligibility must be prorated based on a student’s enrollment status:
- Students enrolled less than full-time (12+ credits Undergraduate or 6+ credits Graduate) will have their annual loan limits reduced proportionally based on the percentage of the full-time enrollment.
- For example, a half-time student (6 credits Undergraduate or 3 credits Graduate) may receive only 50% of their annual loan limit.
Courses that receive a grade of W will now impact student loan eligibility:
- Schools are now required to consider any enrollment changes occurring after disbursement, including courses that receive a grade of W.
- For example, an undergrad student who borrows the maximum student loans, enrolls in 12 credits fall and 12 spring, withdraws from 3 credits fall, will require their spring student loans to be reduced for the change in their total annual enrollment. However, if the student adds credits to get to 15 in the spring, that would give them 24 total for the academic year so no reduction would be required. Students who borrow federal loans should contact the Financial Aid Office prior to dropping any courses.
Undergraduate Students
What’s new:
- Annual loan amounts are adjusted down if enrolled less than full-time
- Other loan types like the Federal Parent PLUS Loan now have new caps (see below)
- Loan amounts that have been repaid, forgiven, or otherwise discharged will now count toward lifetime loan limits
Graduate Students
Effective Date: July 1, 2026 for new borrowers who have not previously borrowed a direct loan in their current course of study. Also applies to many continuing graduate students who have been in their program two or more years.
OBBBA has major changes for graduate and professional student borrowing:
- Graduate PLUS Loans will no longer be available for new borrowers as of July 1, 2026*.
- Graduate students will be limited to Direct Unsubsidized Loans with an Aggregate limit of $100,000.
- Loan amounts are prorated for less than full-time enrollment (6 graduate credits).
* Legacy Provision:
A student can continue to borrow from the Graduate PLUS Loan program if:
- The student has a Federal Direct Loan disbursed before July 1, 2026, while enrolled in a credentialed program of study, and
- The student is enrolled in the same credentialed program, and
- The student has not withdrawn or had interrupted enrollment in their course of study
Under these conditions, and assuming all other eligibility requirements are met, the student may continue to borrow from the Graduate PLUS Loan as long as their total enrollment in the program does not exceed the shorter of 3 years or the published length of the program.
Parent PLUS Loans
Effective Date: July 1, 2026 for new students. This is also Effective July 1, 2026 for continuing students who have not previously borrowed a direct loan for their course of study or who have been in their program for 3 or more years.
Federal Parent PLUS loans will now be capped at:
- $20,000 per year per dependent student
- $65,000* lifetime per dependent student
These caps are new, replacing the prior ability to borrow up to the full cost of attendance without a lifetime limit.
* Legacy Provision:
A parent can continue to borrow funds from the Parent PLUS Loan program exceeding these limits if:
- The student has a Federal Direct Loan disbursed before July 1, 2026, while the dependent student was enrolled in a credentialed program of study, and
- The student is enrolled in the same credentialed program.
Under these conditions, a parent may continue to borrow from the Parent PLUS Loan for 3 academic years or until their dependent student reaches the end of their program of study, whichever comes first.
Lifetime Borrowing Cap
All Federal student loan borrowing (excluding Federal Parent PLUS loans) will be subject to a combined lifetime cap of approximately $257,500 across all loan types — a first under federal law.
Federal Pell Grant Eligibility
Students will no longer be eligible for a Pell Grant if their Student Aid Index (SAI) exceeds twice the maximum Pell award for a given year. For the 2026-2027 academic year, with a maximum Pell award of $7,395, any applicant with an SAI of $14,790 or higher will be ineligible for Pell Grant funding.
Students who receive grants or scholarships from non-federal sources covering their entire COA are ineligible to receive a Pell Grant, even if otherwise eligible for the program.
