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Changes to Federal Student Aid Under One Big Beautiful Bill
Effective July 1, 2026
Federal Student Aid Updates
The One Big Beautiful Bill Act introduces significant updates to federal student aid programs beginning with the 2026–2027 academic year. These changes affect federal loan limits, repayment options, Pell Grant eligibility, and borrowing structures for both students and families. Students and families are strongly encouraged to review these changes carefully and plan accordingly.
Please note that final rules associated with the regulatory interpretation for the reconciliation bill have not yet been published. The information provided is based on the current interpretation of the law and may be subject to changes. As more information becomes available from the U.S. Department of Education, Ave Maria University will continue to monitor the development of the federal regulations associated with the bill and provide updates accordingly. For further information and updates, you may refer to the Federal Student Aid Website: One Big Beautiful Bill.
Unless otherwise stated, the effective date for changes below is July 1, 2026.
Pell Grant Program Updates
- Pell Grant eligibility will be adjusted under updated federal income thresholds.
- Students who receive aid from non-federal sources covering their entire cost of attendance are ineligible to receive a Pell Grant, even if otherwise eligible for the program.
- Students are ineligible from receiving the Pell Grant if their Student Aid Index (SAI) exceeds twice the maximum Pell Grant.
Federal Student Loan Program Changes
Enrollment and Aid Eligibility for Undergraduate Students
- Federal loan eligibility will be prorated based on enrollment intensity.
- Students enrolled less than full time may receive reduced loan amounts.
Parent PLUS Loans
- Parent borrowing will now be capped:
- $20,000 per year per student
- $65,000 lifetime limit per student
- This represents a change from prior rules, which allowed borrowing up to the full cost of attendance.
What Current Parent Borrowers Need to Know
What New Parent Borrowers Need to Know
Graduate and Professional Students
- The Federal Graduate PLUS Loan program will be eliminated for new borrowers beginning July 1, 2026.
- New lifetime borrowing limits will apply:
- $100,000 lifetime limit for most graduate programs
- $200,000 lifetime limit for professional degree programs
Student Loan Repayment Changes
Beginning July 1, 2026, federal student loan repayment options will be simplified.
Available Repayment Plans
Students will have access to two primary repayment options:
Standard Repayment Plan
- Fixed monthly payments
- Repayment terms typically range from 10 to 25 years
Repayment Assistance Plan (RAP)
- Income-based repayment structure
- Monthly payments generally range from 1% to 10% of discretionary income
Elimination of Existing Plans
The following programs will be phased out for new borrowers:
- SAVE Plan
- PAYE Plan
- ICR and other legacy income-driven repayment plans
Borrowers will transition into the new repayment system as federal rules are implemented.
Transition and Grandfathering Provisions
- Students who borrowed federal loans prior to July 1, 2026 may retain access to certain existing programs for a limited transition period.
- Some borrowers may continue under prior loan rules depending on program enrollment continuity.
Important Information for Students
These changes represent a significant shift in federal financial aid policy. Students are encouraged to:
- Review borrowing plans prior to the 2026–2027 academic year
- Consider enrollment intensity when planning course loads
- Contact the Financial Aid Office for personalized guidance
- Monitor official communications for ongoing implementation updates