Federal Loan Updates (OBBBA)

The One Big Beautiful Bill Act (OBBBA), passed by Congress in July 2025, introduces changes effective July 1, 2026, without affecting borrowing for the 2025–26 academic year. Highlights include:

• Federal Loan Borrowing Caps:
  
  • Graduate Borrowers: Direct Unsubsidized Loans are limited to $20,500 per year and a $100,000 total cap for all graduate degree programs.
  • Professional Programs: Direct Unsubsidized Loans can be up to $50,000 per year with a $200,000 lifetime borrowing limit.
  • Graduate, Professional, and Undergraduate Programs will all be subject to a prorated loan model for awards.  Previously, if you were enrolled at least half-time, you could often access your full annual loan limit. Starting July 1, 2026, annual federal loan eligibility will be affected directly by the unit load.

• OBBBA uses a "fractional" math formula. Your annual loan limit is multiplied by the percentage of a full-time load you are taking.
• Graduate/Legacy Professional Example: If your program considers 16 units a full year and you take 8, you are eligible for 50% of the $20,500 limit ($10,250).
• New Professional Example: If your program considers 16 units a full year and you take 8, you are eligible for 50% of the $50,000 limit ($25,000).

YES, even if you received a disbursement before July 1, 2026, for your current program and fall under the Legacy Provision, you are still subject to this rule.

• 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. Please speak to your financial aid office with any questions on eligibility.
• Students must have borrowed a federal Direct Loan (Unsubsidized, or Grad 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.
• We do not yet have explicit direction from the Department of Education on how grandfathering applies to dual-degree programs. Updates will be posted as information becomes available.

Under OBBBA, the overall lifetime borrowing limit for federal student loans, excluding Parent PLUS loans, is $257,500. This applies to all new borrowers who do not meet the limited exception, or after July 1, 2026.

The legacy borrowers may exempt students who have borrowed any federal student loan before July 1, 2026, and stay enrolled in the same academic program through June 30, 2026, to 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 (Unsubsidized, or Grad 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 already completed.
• We also do not yet have clear federal guidance on dual-degree programs. Please speak to your financial aid office with any questions.

Only if the summer class is part of your program of study and your coursework/enrollment begins before July 1, 2026.

If you haven't borrowed under the Federal Direct Loan Program for your current program, and you anticipate needing any federal loans above the new caps in future academic years, you may wish to consider whether borrowing before July 1, 2026, aligns with your academic and financial plans. This may allow you to access current borrowing limits rather than the new caps.

Contact your office of financial aid and speak to them about your program enrollment plans and current financial plan.

Private student loans, or alternative education loans, help bridge funding gaps beyond federal loan limits. Federal eligibility should generally be exhausted before turning to private loans.

There are many private lenders, and each may offer different options. Consider:

• Confirming eligibility with lenders
• Borrowing limits (your school’s COA minus aid)
• Cosigner requirements and release options
• Interest rates: fixed vs. variable
• Borrower benefits, such as autopay reductions
• Fees (origination, late payment, returned check)
• Repayment terms, including grace, deferment, and forbearance

Federal loans have attributes not present in private loans and are generally easier to obtain. We recommend using federal loans first, and then considering private loans if additional borrowing is needed.

• Ideally, apply after committing to a school and receiving your financial aid package so that you may accurately assess your financial needs and the amount you need to borrow.
• Students should apply up to two months before beginning school so that they can review the terms. Applying to different lenders within a two-week period will avoid a hard pull on your credit score.
• Lender options can be found at FastChoice

Reviewing your financial aid package first helps minimize borrowing needs by accounting for scholarships, grants, and work-study. This strategic approach reduces potential debt.

Yes, but because tuition and fees have due dates, you should align your application timing with your school’s deadlines and academic start dates to ensure the timely availability of funds.

Use online loan calculators and pre-qualification tools from various lenders. The Free Application for Federal Student Aid (FAFSA) can also provide insight into federal loan options.

Yes, you may undertake a number of actions:

• Become an authorized user on a family member’s credit account, if that person has good credit history
• Consider opening a secured credit card or a student credit card
• Pay all bills on time
• Keep utilization on credit lines below 30%
• Avoid opening too many accounts
• Monitor your credit report
• Consider a cosigner

Student loans are unsecured, which may result in higher rates than loans with collateral. Rates reflect your credit score, cosigner status, repayment term, and loan type. Many borrowers work to maintain or improve their credit profile while in school and refinance after graduating and obtaining verifiable employment.

Lenders use a variety of factors that include:

• Credit score
• The existence of a cosigner and that person’s credit
• Repayment length
• Broader economic conditions

If you are denied a private loan, please consider applying with a cosigner.

A cosigner has a secondary legal responsibility if you default on the loan. Having a cosigner often results in a lower interest rate. Many lenders offer cosigner release after a borrower meets specific criteria (e.g., a certain number of timely payments, creditworthiness). Details vary by lender.