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One Big Beautiful Bill Act (OBB) - Federal Student Loan Updates

Key Changes to Federal Student Loans Made in the Recent One Big Beautiful Bill Act

Enacted in July 2025, the One Big Beautiful Bill Act (OBBB) made significant changes in federal student loan programs as a part of the shifts in fiscal policy. While there are no changes to federal student loans for the 2025–26 academic year, changes resulting from the legislation are slated for July 1, 2026.

Bay Path University is continuing to track all of these changes and plans to update this site as more clarification from ED is released. In the meantime, please note:

There are no changes to financial aid for the 2025–26 academic year, stemming from this legislation.
Students starting graduate school before July 1, 2026, may still be eligible for Grad PLUS under current rules. Specific guidance on this transition is expected but not yet available.

We're here to help! If you have questions or would like to speak with your financial aid representative, please contact Student Financial Services at sfs@baypath.edu or (413)565-1256.

Important disclaimer: The information contained on this page is provided by Bay Path University Student Financial Services staff to orient students to the changing landscape of federal student loan programs. While it is based on our good faith understanding of the evolving federal standards, it is not official guidance and should not be regarded by students as definitive. Students should refer to federal governmental sources for official guidance. See studentaid.gov for more information.

Below is a summary of what we know so far, what these changes may mean for you, and the steps you can take to begin preparing. The information on this page is provided to help students and families navigate and prepare for the changes to federal student aid programs.

What We Know As of March 2026

Grad PLUS Loans

Grad PLUS loans will be phased out beginning on July 1, 2026; beginning on that date, new loans will not be available for new borrowers.
There will be some continuing eligibility for existing Grad PLUS borrowers as they complete their current programs.

New Graduate Unsubsidized Direct Loan Limits (effective July 1, 2026)

Professional programs:
- Up to $50,000/year, $200,000 lifetime borrowing limit.
Other graduate programs:
- Up to $20,500/year, $100,000 lifetime borrowing limit.
Definitions of “professional” vs. “graduate” programs are still unclear (more on this below).
Existing Unsubsidized loan borrowers can access unsubsidized loans under the current limits until completing their current program or for three additional years, whichever is less.

What Does This Mean?

These changes mean it’s more important than ever to understand how much you’ve already borrowed because it could directly impact how much federal aid you will be eligible for. You may look up your entire federal student loan borrowing history at studentaid.gov. It also means that many students will have to rely on private financing to help cover remaining tuition and out-of-pocket costs.

Undergraduate Limits and Parent PLUS Loans

There are no changes for undergraduate loans, although undergraduate loans will count towards the new lifetime limits.
However, starting July 1, 2026, Parent PLUS loans will be capped at $20,000 per student per year, with a $65,000 lifetime limit per dependent student.
Existing Parent PLUS borrowers who have borrowed for their students before July 1, 2026, can continue with the current limits for 3 more years or until the student’s program ends.

Public Service Loan Forgiveness (PSLF)

No changes to PSLF provisions, although new limitations on eligibility have been proposed separately from the OBBB in other regulatory action.

What Remains Unclear

What is considered a “Professional” vs. “Graduate” Program?

Definitions and eligibility for higher borrowing caps available to students in “professional” programs are to be determined by ED, including how dual degree students will be treated.
However, the definition remains vague, with phrases like “not limited to” and “generally requires licensure.” In the months ahead, ED will need to confirm which programs qualify for the higher $50,000/year and $200,000/lifetime borrowing cap.

Grad PLUS Loans for Existing Borrowers

It's uncertain if current students who remain eligible for Grad PLUS loans after July 1, 2026, can choose to decline Grad PLUS in order to access the new $50,000 Unsubsidized loan cap.
It’s uncertain, but the current indication is that a student who borrows any Direct Loan or Grad PLUS before July 1, 2026, will remain eligible to borrow a Grad PLUS loan for the “3-year or until program completion” window so long as that student remains in the same program at the same school for which they borrowed the pre-July 1, 2026 loan.
Awaiting further guidance from ED.

Loan Proration for Part-Timers

The bill includes a provision to prorate loan amounts based on enrollment.

Frequently Asked Questions (FAQs)

This means that if you enroll less than full-time, your loan eligibility may be lower than in the past.
These limits are designed to better align loan amounts with a student’s enrollment and educational costs.
We are awaiting clarification from ED on how this will be applied to both graduate and undergraduate students.

New Repayment Plans

For new loans disbursed after July 1, 2026, the bill eliminates current income-driven repayment plans (IBR, PAYE, SAVE) and replaces them with a new Repayment Assistance Program (RAP).
Students who have borrowed loans before July 1, 2026, and will borrow a new loan after July 1, 2026, are limited to the new RAP or the standard plans for the new loan.
RAP borrowers will not be locked into a 30-year plan. They can switch to a standard plan, which ranges from 10 to 25 years.
Borrowers with no new loans made on or after July 1, 2026, can continue to be eligible to enroll in the current Standard, current Income Based (IBR), Graduated, and Extended repayment plans, and could also opt in to the new RAP. Current borrowers enrolled in ICR, PAYE, or SAVE plans must transition to a new repayment plan by July 1, 2028. If no selection is made by that date, they will be moved into RAP.
More information on the new RAP is forthcoming.

Will taking classes part-time reduce the amount I can borrow?

Yes. Under OBBBA, your loan eligibility is adjusted based on enrollment level. If you drop below full-time enrollment, your available loan amount may be prorated, even if you remained eligible for the full amount in past years. 

How do I figure out whether my borrowing history makes me a “new” or “current” borrower?

Start by looking at when you first borrowed loans for your current program. If your federal loans for this program were disbursed before July 1, 2026, you likely fall under the “current borrower” category. If not, you will be regarded as a “new borrower,” even if you borrowed in the past for a different program. 

What happens if I change academic programs after July 1, 2026?

Switching to a new program (even at the same school) can reset your category. That means your loan limits and eligibility rules may shift to those of a “new borrower,” even if you previously qualified as a “current borrower” in your old program. 

What should graduate or professional students consider before starting a second advanced degree?

Beginning a new graduate or professional program after July 1, 2026, will classify you as a “new borrower,” even if you have already completed a previous graduate degree.  Most students will need to explore private financing options to finance costs beyond what the new loan limits will cover.  Review the “What Is Private Financing?”  question below to help prepare.

If Graduate PLUS Loans are being phased out, what options will students have to cover remaining costs?

Students may need to consider a mix of external scholarships, assistantships, employer sponsorships, or private loans to cover gaps once the Graduate PLUS program is phased out.

How do professional program classifications affect borrowing limits?

Because OBBBA uses a narrower definition of “professional programs,” students in graduate fields not on the federal list may fall under the lower graduate borrowing caps. 

If my program extends longer than expected, do I retain my original borrowing rules?

Current borrowers meeting eligibility requirements are protected only for a limited time. If your program extends beyond the allowable “legacy” window, you may be subject to the new annual and lifetime loan limits. 

What steps should I take now if I’m planning to start a new program in 2026 or later?

Students expecting to start a new program after July 1, 2026, should evaluate how OBBBA’s new limits align with total program costs, timeline to completion, and anticipated financial resources. Early planning will help avoid surprises once the new borrowing rules take effect. 

What is private financing?

Private financing programs are unsecured educational loans offered by banks, credit unions, and other lenders. These loans must be repaid with interest. Rates and fees depend on your creditworthiness and sometimes that of a co-borrower. Most lenders require a minimum credit score of around 640 for loan approval. Now is the perfect time to check your credit, understand your credit rating and take steps to strengthen it if needed. You can start by obtaining a free credit report. Reviewing your credit report for errors, paying down existing debt, and making payments on time to improve your score before applying are all steps you can take now to prepare. If your score isn’t quite there yet, don’t stress. Many students look for a credit-worthy co-signer to help secure a private loan. Undergraduate students usually need a co-borrower. Graduate students can apply for private financing on their own, but may still benefit from having a co-borrower, for example, for better interest rates.