One Big Beautiful Bill Act and Loan Changes

Navigating Federal Aid Changes (OBBBA)

The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, introduces the most significant reforms to federal student aid in decades. These changes will fundamentally change how students and parents finance education starting July 1, 2026. We put this resource together to help you understand and navigate some of the major changes.

Important disclaimer: The Department of Education (ED) issued its final rule regarding federal student loan programs on May 1, 2026. While many provisions are clear, some still require further clarification from the U.S. Department of Education.  This page will continue to be updated as we receive further guidance. Recent updates to OBBBA guidelines may affect your current status or upcoming requirements.

If you have any questions, feel free to reach out to our Student Services Center.

Review OBBBA Policy Changes

Key Changes to Federal Student Loans

1. Phase-Out of Graduate PLUS Loans

For new borrowers starting after July 1, 2026, the Graduate PLUS loan program will be eliminated. Graduate students who do not meet the Legacy Provision will need to rely on unsubsidized loans and/or private education loans to cover their remaining costs.

2. New Direct Loan Limits

The law establishes new annual and aggregate limits based on your degree type.

Note: The lifetime maximum aggregate amount of loans a student may borrow is $257,500. This includes all subsidized, unsubsidized and Graduate PLUS loans received across all schools and programs.

3. Changes for Undergraduate Parent Loans (Parent PLUS)

Parent PLUS loans will remain available but will now have “hard caps” (shown below). This section applies to parents of dependent undergraduate students who do not meet the legacy provision described below. It does not affect Graduate PLUS loans:

• Annual Cap: $20,000 per student
• Lifetime Cap: $65,000 per student

For additional information please read through the What New Parent Borrowers Need to Know

4. Enrollment Proration

Starting July 1, 2026, federal law requires institutions to prorate loan amounts based on your enrollment status. If you are enrolled less than full time, your loan eligibility will be reduced proportionally. This rule will apply to all students, including those who fall under the Legacy Provision.

Example: If you are a half-time graduate student, you may be eligible only for $10,250 in unsubsidized loans for the year (50% of the annual $20,500 limit). If you meet the Legacy Provision and are eligible for Graduate PLUS, your PLUS loan will also be prorated by the same percentage. 

The Legacy Provision

If you are enrolled and borrowing federal loan funds prior to July 1, 2026, you may be eligible to continue under the “old” rules (including access to Graduate PLUS loans) through a Legacy Provision.

To qualify for the Legacy Provision, you must meet ALL three requirements:

1. Enrolled: You must be admitted, enrolled, and attending classes in your current program prior to July 1, 2026.
2. Borrowed: You must have received a Direct Unsubsidized, Subsidized, or PLUS loan for your current program prior to July 1, 2026.
3. Timeline: You may remain under this provision only for the lesser of three years or the remaining time to complete your specific program (defined as the difference between your programs published length and the amount of time you have already completed).

Loss of Legacy Provision

Students who meet the Legacy Provision will lose the exception and be subject to the new more restrictive rules if any of the following occur after July 1, 2026:

• Student changes their program of study (not including changes of Major for undergraduate programs or change in concentration for graduate students).
• Student withdraws from all courses within a term after beginning attendance.
• Student takes a Leave of Absence.
• Student has exceeded their programs’ published length.

What You Should Do Now

• Review Your History: Log in to studentaid.gov to check your total lifetime borrowing.
• Secure Legacy Status: If you have not yet taken out a federal loan for your current program, doing so prior to July 1, 2026, may protect your ability to use PLUS loans for the next three years.
• Plan Your Program: Avoid program changes or “academic pauses” after July 1, 2026, as these may trigger a loss of legacy status. Specifically, maintain continuous enrollment. Withdrawing or taking a leave of absence after July 1, 2026, may break your legacy status and force you into the new, lower loan limits upon return.

• Submit Your FAFSA: Complete the 2025-26 FAFSA immediately if you are starting in summer 2026.
• Explore Private Options: You can research private credit-based loans via our Private Loan Portal (ELMSelect).
• Explore Scholarship Options: Check out APU’s scholarship search software, ScholarshipUniverse, to see what free internal and external scholarship opportunities might be available to you. 

 

Frequently Asked Questions (FAQs)