Last updated: April 3, 2026
On July 4, 2025, the One Big Beautiful Bill Act was signed into law, introducing significant changes to federal student aid programs. Beginning July 1, 2026, several important changes will reshape how students and families pay for higher education. We are actively reviewing the legislation and will continue to share updates as additional guidance becomes available from the U.S. Department of Education and other relevant authorities.
As of November 6, 2025, the Department of Education completed the first of two negotiated rulemaking committee sessions. The Re-imagining and Improving Student Education (RISE) Committee came to a consensus by developing regulations to implement statutory changes to student loan programs. This was followed by a period of public comment in early 2026, with final rules to be published in the federal register in spring 2026.
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. While based on our good-faith understanding of the changes to come, we are still awaiting official guidance, and this information is subject to change.
No changes were made to the annual or lifetime borrowing limits for undergraduate Federal Direct Subsidized and Unsubsidized Loans.
All Federal Direct Loans, including Subsidized and Unsubsidized, will be prorated based on enrollment if the student is enrolled less than full-time.
Parents who borrow their first Parent PLUS loan on or after July 1, 2026, will be considered a new borrower and will be subject to updated Parent PLUS loan borrowing limits.
Parent PLUS loan borrowing will be capped at $20,000 per student per year, with a lifetime maximum of $65,000 per student.
Current borrowers who obtained a Parent PLUS loan before July 1, 2026, for a dependent student's current academic program may continue to borrow at the current maximum limit of up to the cost of attendance (minus other financial aid) for up to three academic years, or the remainder of the student's expected time to degree, whichever is less. There is no lifetime limit on the Parent PLUS loan for current borrowers.
Draft federal guidance defines "professional degree programs" as including only the following: Pharmacy (PharmD), Dentistry (DDS or DMD), Veterinary Medicine (DVM), Chiropractic (D.C. or DCM), Law (LLB or J.D.), Medicine (M.D.), Optometry (O.D.), Osteopathic Medicine (D.O.), Podiatry (DPM, D.P., or PodD), Theology (MDiv or MHL), and Clinical Psychology (PsyD or PhD).
Federal Direct Unsubsidized loans for graduate and professional students will be prorated based on enrollment if the student is enrolled less than full-time.
Starting July 1, 2026, new borrowers will no longer be eligible for the federal GradPLUS Loan.
Graduate students may borrow up to $20,500 per year, with a lifetime limit of $100,000 (excluding undergraduate loans).
Professional students (e.g., law and clinical/counseling/applied psychology) may borrow up to $50,000 per year in Unsubsidized Loans, with a lifetime limit of $200,000 (excluding undergraduate loans).
If you have borrowed an Unsubsidized or GradPLUS loan in your current program of study, you will continue to qualify for existing Unsubsidized Loan limits for a limited time based on your expected time to credential. Proposed language indicates this period is up to three academic years or the remaining length of your program at the time eligibility is determined, whichever is shorter. We will publish updates as details become available.
If you are enrolled in your current program and borrowed a Federal Direct loan before July 1, 2026, you will still be able to access GradPLUS for up to the cost of attendance for a limited time as noted above.
These legacy provisions apply only to loans borrowed for your current program if continuous enrollment is maintained. If you borrowed Federal Direct loans for a previous program or start a new program after July 1, 2026, you will not be eligible for the GradPLUS loan in your new program.
The bill eliminates current income-driven repayment plans (IBR, PAYE, SAVE) and replaces them with a new Repayment Assistance Program (RAP).
Students who borrowed loans prior to July 1, 2026, and will borrow a new loan after July 1, 2026, are limited to the new RAP or standard plans. RAP borrowers will not be locked into a 30-year plan; a standard 10- or 25-year plan will also be available.
All new Parent PLUS loans borrowed after July 1, 2026, must be repaid under the standard repayment plan. Parent borrowers are not eligible for RAP.
Parent PLUS borrowers who borrowed a loan before July 1, 2026, and any subsequent Parent PLUS loan borrowed after July 1, 2026, must all be repaid under the standard plan.
Current borrowers who do not borrow a loan after July 1, 2026, and want to stay in an income-driven plan must enroll by June 30, 2028. Those who do not will be automatically moved into RAP.
Borrowers currently enrolled in the SAVE repayment plan will have 90 days, starting on July 1, 2026, to select another repayment plan. Loan servicers will communicate specific deadlines to affected borrowers.
The bill now allows borrowers to rehabilitate a defaulted loan twice, with a minimum rehabilitation payment of $10 per month, effective July 1, 2027.
The bill sunsets economic hardship and unemployment deferments, effective July 1, 2027.
Any loans made on or after July 1, 2027, are eligible for forbearance for up to nine months in any two-year period.
There are no changes to the Public Service Loan Forgiveness (PSLF) program.
However, some borrowers who were enrolled in income-driven repayment (IDR) programs and had or will have loans discharged may be subject to changes in tax policy. Borrowers are encouraged to speak with the IRS or a tax professional to determine whether their loan cancellation is considered taxable income.
The changes listed below are not subject to negotiated rulemaking, and the effective dates are final.
The bill reinstates the exemptions of family farm and family-owned small business assets from the Student Aid Index (SAI) calculation and expands asset exemptions to family-owned commercial fisheries, effective for the 2026-2027 award year.
The bill now requires that foreign income be included in the reported Adjusted Gross Income (AGI) used to calculate Pell Grant eligibility, effective for the 2026-2027 award year.
The bill prevents students from receiving a Pell Grant if their SAI exceeds twice the maximum Pell Grant award, effective for the 2026-2027 award year.
Students who receive grants or scholarships from non-federal sources covering their entire cost of attendance (COA) are ineligible to receive a Pell Grant even if they are otherwise eligible, effective for the 2026-2027 award year. This includes students who receive a full athletic or academic scholarship, among other scenarios.
For scholarship-specific questions
scholarships@niu.edu