Financial Aid Updates

 

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Federal Loan Changes, July 1, 2026

 

The “OBBBA” (the One Big Beautiful Bill Act) makes the biggest overhaul to federal student loans in years. Most of the major changes begin on July 1, 2026 and primarily affect new borrowers and part time students taking out loans for the 2026–27 academic year and later.

Alternative Private Education Loans

Private Education Loan can be used to replace lost Federal funding.  A list of potential Private Lenders who may be able to provide private loans to replace PLUS Loans or reduced eligibility is at https://www.valdosta.edu/admissions/financial-aid/loans/alternative-loan-information.php.

 

Here are the key impacts:

1. Part-time students receive less loan money

Before OBBBA:

• students enrolled at least half-time could often access the full annual loan limit.

After July 1, 2026:

• federal loan eligibility becomes prorated based on course load.

Example:

• if full-time is 24 credits/year and a student takes 12 credits,
• they may receive only 50% of the annual loan limit.

This is a major change for working adults and part-time graduate students.

 

2. Graduate PLUS Loans are being eliminated

Beginning July 1, 2026:

• New graduate and professional students will no longer be able to use Grad PLUS loans.
• Previously, Grad PLUS allowed students to borrow up to the school’s full cost of attendance.

Students already borrowing before July 1, 2026 may be “grandfathered” under temporary transition rules if they remain continuously enrolled in the same program.

That protection may last:

• up to 1 additional year,
• or until program completion,
• whichever comes first.

 

3. New borrowing caps for graduate and professional students

The law creates stricter federal loan limits.

Graduate students

• Annual limit: $20,500
• Lifetime limit: $100,000

Professional programs (medicine, law, dentistry, etc.)

• Annual limit: $50,000
• Lifetime limit: $200,000

There is also a broader lifetime federal borrowing cap of:

• $257,500 total federal student debt
  • excluding Parent PLUS loans

These limits are much lower than what some graduate students previously borrowed using Grad PLUS.

4. Parent PLUS loans will be restricted

Starting July 1, 2026:

• Parent PLUS loans capped at:
  • $20,000 per year per student
  • $65,000 lifetime per dependent student

Previously, parents could often borrow up to the full remaining cost of attendance.

The law also limits repayment flexibility for future Parent PLUS borrowers:

• fewer income-driven repayment options
• more limited access to forgiveness programs such as Public Service Loan Forgiveness (PSLF) in some situations

5. Income-driven repayment plans are being overhauled

The current repayment system is largely being replaced.

Plans being phased out for new borrowers include:

• SAVE
• PAYE
• ICR

A new plan called the Repayment Assistance Plan (RAP) becomes the primary income-based option.

Key RAP features reported so far:

• payments tied to income
• roughly 1%–10% of adjusted gross income
• minimum payment around $10/month
• forgiveness after about 30 years
• unpaid interest subsidies to reduce balance growth

Borrowers generally will choose between:

1. RAP
2. a standard/tiered repayment plan

6. Some deferment and hardship protections are reduced

The legislation is expected to:

• reduce availability of economic hardship deferments
• reduce unemployment deferments
• tighten forbearance rules for new loans after implementation

What does this mean in practice

Undergraduate students

Most undergraduate Stafford loan limits remain similar, though overall lifetime caps and proration rules may reduce flexibility.

Graduate/professional students

This group has the largest impact:

• less federal borrowing capacity
• more reliance on private loans, scholarships, or employer assistance
• higher out-of-pocket exposure for expensive programs

Parents

Families depending heavily on Parent PLUS loans may need alternative financing strategies. 

Alternative Private Education Loans

Private Education Loan can be used to replace lost Federal funding.  A list of potential Private Lenders who may be able to provide private loans to replace PLUS Loans or reduced eligibility is at https://www.valdosta.edu/admissions/financial-aid/loans/alternative-loan-information.php.