Changes to Federal Student Loans

While total loan limits for undergraduates are staying the same, the OBBB Act introduces loan proration. This means your federal loan amount will now be tied directly to your enrollment level. If you are enrolled less than full-time, your loan eligibility may be reduced to reflect your actual credit load.

Starting with the 2026–27 award year (beginning Summer 2026), Federal Direct Loan amounts must be adjusted for students enrolled less than full-time. This process is known as a Schedule of Reduction (SOR).

Under new Department of Education guidelines, your annual loan limit is now directly tied to your total credits for the academic year.

For example, the federal standard for a full-time undergraduate year is 24 credits. If you enroll in fewer than 24 credits over the course of the year—or if you withdraw from a course and fall below that 24-credit threshold—your total loan eligibility will be reduced (prorated).

Does this apply to me if I already have loans? Yes. The Schedule of Reduction applies to all borrowers starting Summer 2026. Even if you are a legacy borrower with loans originating before July 1, 2026, your annual loan limit will be reduced if you are enrolled less than full-time.

Significant changes are coming to federal graduate aid starting July 1, 2026.

Grad PLUS is Ending

The Grad PLUS loan is being phased out. If students have not borrowed a federal loan prior to July 2026, they will be limited to Federal Unsubsidized loans only.

• The Legacy Exception: If you are a current student and have already received a federal loan disbursement before July 1, 2026, you are "grandfathered" in. You can continue to access Graduate PLUS loans under existing annual limits to help finish your current degree. Please read the maintaining you legacy status area.
• New Lifetime Caps: New graduate borrowers will face a lifetime limit of $100,000 for graduate-level loans. Importantly, any loans you took out for your undergraduate degree do not count toward this $100,000 cap.

If you are a "Legacy" borrower (meaning you received a federal loan disbursement before July 1, 2026), you can keep your current loan limits for a limited time—but only if you follow specific enrollment rules.

The Requirements for Legacy Eligibility

• Continuous Enrollment: You must remain enrolled at the same school without a break.
• Same Program: You must stay in the same degree program.
• Undergraduates: You can change your major, but you cannot change your degree level (e.g., moving from an Associate’s to a Bachelor’s program will void your legacy status).
• Graduate Students: Changing your major or program will immediately transition you to the new, lower OBBB loan limits.

How Long Does Legacy Status Last?

Legacy benefits are not indefinite. They expire at the earliest of these three dates:

1. When you complete your current degree.
2. After 3 additional academic years.
3. At the end of the 2028–2029 academic year (the final cutoff for all legacy status).

Note: Withdrawing from school or transferring to a different institution will result in the loss of your legacy eligibility.

New Parent PLUS Loan Limits

Combined Limits: These caps apply to the student, not the individual parent. 

• If both parents borrow for the same student, their combined total cannot exceed the $20,000 annual or $65,000 lifetime limits.

Under the legacy provision, parents of dependent undergraduates who have borrowed a parent PLUS loan or their student borrowed a subsidized or unsubsidized that disbursed before July 1, 2026, may be able to continue borrowing with no changes in eligibility of their annual limit for parent PLUS loans.

• Annual Limit: Parents may borrow up to $20,000 per year for each dependent student.
• Aggregate (Lifetime) Limit: There is a new lifetime cap of $65,000 per student.

Federal Graduate Loans

The maximum amount of Federal Direct Unsubsidized Loans you can take in a single year is now capped at $20,500.

Under the new OBBBA regulations, federal borrowing for graduate school is now capped.

Graduate students are limited to $20,500 per year and a total of $100,000 for their entire graduate program. While your previous undergraduate loans don't count toward that $100,000 program limit, all of your student debt combined cannot exceed the new lifetime federal limit of $257,500.

Starting with the Summer 2026 semester, the Department of Education has introduced a new Schedule of Reduction (SOR). This change ties your annual loan limit directly to the number of credits you complete each year.

How the "Schedule of Reduction" Works

Previously, being "half-time" often allowed you to receive a full-time loan amount. Under the new One Big Beautiful Bill Act (OBBBA):

• Your annual loan limit is based on a 24-credit year (for undergraduates).
• If you take fewer than 24 credits across the academic year, your loan is prorated (reduced) to match your enrollment.
• Legacy Borrowers: This rule applies to everyone. Even if you borrowed before July 1, 2026, your loans will be reduced if you are less than full-time.

Example: A student with a $7,500 annual limit drops a class in the Fall.

The Math:

1. New Annual Limit: 87.5% of $7,500 = $6,563
2. Fall Loan Received: $3,750 (Paid before the student dropped the class)
3. Remaining Spring Loan: $6,563 - $3,750 = $2,813

The Result: Even though this student is full-time in the Spring, they will receive $937 less than expected because their annual total fell below 24 credits.