Changes to 2026-27 Federal Student Loans

Highlights About the One Big Beautiful Bill Act (OBBBA) and Loans

The One Big Beautiful Bill Act (OBBBA) passed in July 2025, which directly impacts federal student loans beginning July 1, 2026.

These changes do not affect student borrowing for the current academic year (2025–2026). Students who have already borrowed federal loans for their current academic program may be considered a “continuing borrower”, and may be grandfathered in if enrolled in the same academic program through June 30, 2026.

Current Borrowers
These changes do not affect the current academic year. Additionally, students and parents who have borrowed under the Federal Direct Loan Program before July 1, 2026 may continue to access loans under the expiring limits for up to three additional years, or for the remaining time needed to complete the current degree. This is calculated by the minimum length the program, less the amount of time completed, whichever is sooner.

Upcoming Changes to Undergraduate Federal Student Loan Limits

• Annual and aggregate loan limits remain the same as they were before July 1, 2026.

• Lifetime maximum loan limit of $257,500, which includes any amount paid in full or discharged.

• Enrollment of less than full time will result in a reduction in the amount of loan eligibility proportionate to the level of enrollment.

• If one or more of parents receives a Direct PLUS Loan for parents, reduced borrowing eligibility begins on July 1, 2026. Dependent undergraduate students may receive up to $20,000 annually by all parents, with an overall aggregate amount of $65.000, which includes any amount paid in full or discharged.

Upcoming Changes to Federal PLUS Loan Limits

Effective July 1, 2026: 

Graduate programs: Limited to $20,500 per year or $100,000 for the degree.

Graduate PLUS Loans will be phased out starting July 1, 2026, for new borrowers. Existing borrowers may continue to borrow under the generally higher limits for the duration of their degree, subject to some limitations.

• Students must have borrowed a federal Direct Loan (Subsidized, Unsubsidized, or PLUS) in their current program before July 1, 2026.
• The eligibility period, while up to three years or the completion of your degree (whichever is sooner), is also limited by the minimum length of your program minus the time you have been enrolled.

Parent PLUS Loans will be capped at $20,000 per year and $65,000 for the degree.

Please contact UM Student Aid with questions.