Changes From The One Big Beautiful Bill Act (OBBBA/OB3)

The One Big Beautiful Bill Act (OBBBA/OB3), passed in July 2025, includes several changes that affect federal student financial aid beginning with the 2026–27 academic year.

These changes may affect federal loan eligibility, borrowing limits, and enrollment-based loan amounts.

Some students and parents may qualify for legacy status, which allows continued use of prior federal loan rules for a limited time, subject to eligibility.

Legacy Status

Legacy status allows eligible borrowers to continue under prior federal loan requirements for the lesser of:

  • Three academic years, or
  • The student’s expected time to credential

Expected time to credential is the remaining program length minus completed time, based on full-time enrollment.

Eligibility Requirements

Legacy status applies if:

  • The student had a Federal Direct Loan for the same program disbursed prior to July 1, 2026

To maintain legacy status, the student must remain:

  • Within the same program of study and same degree type at the same institution. New transfer students do not qualify for legacy status because of the change in program and/or school.

For undergraduate students, changing majors within the same degree type does not affect eligibility. For purposes of federal guidance, “degree” refers to degree type, not major.

Loss of Legacy Status

Legacy eligibility ends if a student:

  • Withdraws under 34 CFR 668.22, or
  • Leaves the program of study

If the student later re-enrolls, they will be subject to new federal loan limits.

Undergraduate Students

OBBBA changes may affect Pell Grant eligibility and federal loan amounts based on enrollment.

Pell Grant – Full Scholarship Rule

Students whose scholarships and grants fully cover cost of attendance are not eligible for a Pell Grant in the same academic year.

Loan Proration (Less Than Full-Time Enrollment)

Federal Direct Loans are prorated based on enrollment intensity.

Enrollment:

  • Full-time: 12 credit hours per semester
  • Half-time minimum: 6 credit hours
  • Only degree-applicable coursework counts toward aid eligibility

Aid offers assume full-time enrollment unless otherwise stated. Changes in enrollment may adjust future loan eligibility.

Key Rules

  • Annual loan limits are based on total enrolled credits for the year
  • Loan eligibility is recalculated if enrollment changes before later disbursements
  • First disbursement may not exceed 50% of annual eligibility
  • Enrollment changes may reduce remaining eligibility

Examples

  • Dropping from 12 to 9 credits after disbursement may reduce remaining eligibility
  • Withdrawal from a term may reduce annual loan eligibility for the year
  • Mixed full-time/part-time enrollment may still allow full annual eligibility depending on total credits

Parents of Undergraduate Students (Parent PLUS Loans)

Beginning July 1, 2026, new annual and aggregate Parent PLUS Loan limits apply.

To maintain legacy borrowing limits, the student must remain in the:

  • Same program of study and same degree type at the same institution

Changing majors within the same degree type does not affect eligibility.

Legacy eligibility lasts the lesser of:

  • Three academic years, or
  • Expected time to credential

Eligibility ends if the student:

  • Withdraws under 34 CFR 668.22, or
  • Leaves the program of study

If the student re-enrolls, new federal limits apply.

Annual Limits

  • New borrowers: up to $20,000 per year or cost of attendance minus aid
  • Legacy borrowers: prior approved limits continue while eligibility is maintained

Aggregate Limits

  • New borrowers: up to $65,000 per student
  • Legacy borrowers: no aggregate limit while eligible

Graduate Students

Graduate PLUS Loans

  • Eliminated for new borrowers
  • Legacy borrowers may continue for limited eligibility period within same program and degree type

Unsubsidized Loan Limits

  • New borrowers: up to $100,000 (excluding undergraduate loans)
  • Legacy borrowers: up to $138,500 (including undergraduate borrowing) for graduate students; up to $224,000 (including undergraduate borrowing) for professional program students

Enrollment Proration

  • Full-time: 9 credit hours per semester
  • Half-time minimum: 5 credit hours
  • Loan amounts may adjust based on enrollment changes

Professional Students

Graduate PLUS Loans

  • Eliminated for new borrowers
  • Legacy borrowers may continue for limited eligibility period within same program and degree type

Annual Unsubsidized Loan Limits

  • New borrowers: up to $50,000 per year
  • Legacy borrowers: up to $40,500 per year

Aggregate Limits

  • New borrowers: up to $200,000 (excluding undergraduate loans)
  • Legacy borrowers: up to $138,500 (including undergraduate borrowing) for graduate students; up to $224,000 (including undergraduate borrowing) for professional program students

Enrollment Proration

  • Loan eligibility reduces for less than full-time enrollment
  • Adjustments may occur during the academic year based on enrollment changes

Student Support

These examples are general and may not reflect every scenario. Students should contact the Office of Student Financial Aid for assistance with individual circumstances.

Additional Resources

Department of Education OBBBA Updates
Department of Education OBBBA Definitions
Examples of Loan Proration for Less than Full Time Enrollment