How the One Big Beautiful Bill Act (OBBBA) Impacts Federal Student Aid

Federal Student Aid is changing significantly for students and parents beginning with the 2026–27 aid year due to the passage of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025. These changes impact Federal Pell Grant eligibility, how much federal loans students and parents can borrow, how federal loans are adjusted based on enrollment, and eligibility for certain federal loan programs.

Effective Date

All of the changes below apply to Federal Pell Grant eligibility for the 2026-27 academic year and to federal student loans first disbursed on or after July 1st, 2026 in the 2026–27 academic year and beyond.

Please Note

Final implementation details are pending federal regulations from the Department of Education. This information may be updated as additional guidance becomes available.

One of the most important changes under OBBBA is the requirement that federal loan eligibility must be prorated based on a student’s enrollment status:

– Students enrolled less than full-time (12 undergraduate credits/6 graduate credits) will have their annual loan limits reduced proportionally based on the percentage of full-time enrollment.
– For example, a student enrolled half-time (6 undergraduate credits/3 graduate credits) is only eligible for 50% of the annual loan limit they would receive at full-time status.

This change affects both undergraduate and graduate borrowers and replaces prior practice where less than full-time enrollment might not have reduced loan eligibility the same way.

Undergraduates will still have access to Federal Direct Subsidized and Unsubsidized Loans.

What stays the same:
– Annual and aggregate loan limits remain the same (although undergraduate loans will count towards the new lifetime limits).

What’s new:
– Annual loan amounts are adjusted down if enrolled less than full-time
– Other loan types like the Federal Parent PLUS Loan now have new caps (see below)

OBBBA has major changes for graduate and professional student borrowing:

Graduate Students (Non-professional programs)
– Graduate PLUS Loans will no longer be available for new borrowers as of July 1, 2026*.
– Graduate students will be limited to Direct Unsubsidized Loans with:
Annual limit: $20,500
Aggregate limit: $100,000
– Loan amounts are prorated for less than full-time enrollment (6 graduate credits).

* Legacy Provision:
A student can continue to borrow from the Graduate PLUS Loan program if:
1. The student has a Federal Direct Loan disbursed before July 1, 2026, while enrolled in a credentialed program of study, AND
2. The student is enrolled in the same credentialed program.

Under these conditions, the student may continue to borrow from the Graduate PLUS Loan for 3 academic years or until the end of the program of study, whichever comes first.

Federal Parent PLUS loans will now be capped at:
$20,000* per year per dependent student
$65,000** lifetime per dependent student
These caps are new, replacing the prior ability to borrow up to the full cost of attendance without a lifetime limit.

* Limits apply to all parents of a student, regardless of whether one or more parents are borrowing on a student’s behalf

** Legacy Provision:
A parent can continue to borrow funds from the Parent PLUS Loan program exceeding these limits if:
 1. The student has a Federal Direct Loan disbursed before July 1, 2026, while the dependent student was enrolled in a credentialed program of study, AND
2. The student is enrolled in the same credentialed program.

Under these conditions, a parent may continue to borrow from the Parent PLUS Loan for 3 academic years or until their dependent student reaches the end of their program of study, whichever comes first

All Federal student loan borrowing (excluding Federal Parent PLUS loans) will be subject to a combined lifetime cap of approximately $257,500 across all loan types — a first under federal law.

Students will no longer be eligible for a Pell Grant if their Student Aid Index (SAI) is greater than twice the maximum Pell award for that year.  For the 2026-2027 academic year, the maximum Pell award is $7,395, therefore an applicant with an SAI equal to or greater than $14,790 for the award year are ineligible for a Pell Grant.

Students who receive grants or scholarships from non-federal sources covering their entire COA are ineligible to receive a Pell Grant, even if otherwise eligible for the program.

Want to Learn More About Loan Options?

Loans at UMA
Loan Information From Federal Student Aid (FSA)

Advisor, Faculty, and Staff Resources

Key Policy Changes to Know

Four significant provisions take effect July 1, 2026 and will affect how students borrow for the 2026–27 academic year and beyond.

Graduate PLUS loans eliminated: Graduate students will no longer have access to Graduate PLUS loans.

Parent PLUS loan caps: Parent PLUS loans will be subject to new annual and lifetime borrowing limits.

Loan proration: Students enrolled less than full-time (12 credits for undergraduates/6 credits for graduate students) will have loan eligibility prorated based on number of credits of enrollment.

Lifetime limits: New aggregate loan borrowing limits may impact those who have already borrowed.

Talking Points by Audience

  • Direct loan limits for undergrads are not changing under OBBBA
  • Parent PLUS loan changes may affect family borrowing ability; encourage early conversations at home
  • If a family’s Parent PLUS loan eligibility is limited, UMA’s Financial Aid Office can discuss alternative financing options, including alternative (private) loans. 
  • Enrollment level matters: less than full-time impacts loan amounts for all federal loan borrowers
  • Encourage students to check their current aid package in MaineStreet
  • Graduate PLUS loans will not be available for 2026–27 and beyond
  • Unsubsidized loan eligibility remains
  • Students with high prior undergraduate debt may hit new lifetime limits sooner
  • UMA’s Financial Aid Office can discuss additional financing options, including alternative (private) loans and payment plans
  • Parent PLUS loan annual and lifetime caps will apply starting July 1, 2026
  • Families currently borrowing up to full COA may need to explore other options moving forward
  • UMA’s Financial Aid Office can discuss additional financing options, including alternative (private) loans and payment plans
  • Refer all borrowing strategy questions directly to Financial Aid

When to Refer to Financial Aid

If a student has specific questions about their aid package, loan eligibility, or how OBBBA affects their individual situation, please refer them to Financial Aid.

We’re available by appointment, walk-in, or phone at 207-621-3412.

Students can also reach us at umafa@maine.edu.

Frequently Asked Questions

The One Big Beautiful Bill Act (OBBBA), Public Law 119-21, makes significant changes to the federal student loan program, effective July 1, 2026 (the 2026-27 Academic Year). For many students, it means reduced access to federal loans compared to prior years, particularly for graduate students and families borrowing Parent PLUS loans.

The changes apply to all students, continuing and incoming, for the 2026–27 academic year and beyond. Prior loans are not affected.

Some provisions include legacy protections for borrowers who have already begun borrowing in certain loan types. Students with complex borrowing histories should speak directly with UMA’s Financial Aid Office to understand their individual situation.

Note for advisors: If a student asks whether their previous current loans are affected: no. The changes apply to new borrowing beginning with 2026–27.

Graduate PLUS loans are eliminated starting July 1, 2026. Graduate students will still have access to unsubsidized federal direct loans. For many students, this will result in needing to identify other financing options.

Students needing additional resources should explore: graduate assistantships, payment plans, and alternative (private) educational loans. UMA’s Financial Aid Office can help students understand their specific situation and all available options.

Note for advisors: Refer graduate students with specific financing questions to Financial Aid. Avoid advising on alternative loan products directly.

Yes, OBBBA establishes new lifetime aggregate limits for graduate borrowers. Students who have previous undergraduate and/or graduate borrowing may find they have less eligibility remaining for graduate borrowing than expected.

Loan proration (also called Schedule of Reduction) reduces a student’s loan eligibility in proportion to their total enrolled credits by semester. Students enrolled less than full-time (12 credits for undergraduates/6 credits for graduate students) will receive a reduced loan amount rather than the full annual limit.

This will most commonly affect part-time undergraduate and graduate students, including students in their final semester or year who need fewer than a full year’s worth of credits to graduate.

Note for advisors: If a student is worried about their loan eligibility, refer them to Financial Aid. Proration calculations require enrollment data that Financial Aid can assess accurately.

OBBBA introduces annual and lifetime caps on Parent PLUS loan borrowing. Previously, parents could borrow up to the full cost of attendance minus other aid each year, with no lifetime cap. Under the new rules, parents can borrow up to $20,000 per year (per student), and up to $65,000 lifetime (per student).

Families who have historically borrowed the maximum amount through Parent PLUS loans each year may need to explore other financing options. Financial Aid can work with families to identify options, including payment plans and other available loan options.

Annual direct subsidized and unsubsidized loan limits are not changing for undergraduate students.

However, proration rules will apply to undergraduate students enrolled less than full-time (12 credits).

Denial for a Parent PLUS loan (due to credit requirements) triggers the ability for the student to borrow additional unsubsidized direct loan funds.

Please refer the student to Financial Aid. We can confirm additional unsubsidized eligibility and discuss alternative funding.

Validate: It’s natural for students to feel anxious when federal aid policy changes.
Reassure: UMA’s Financial Aid Office is actively working on targeted messaging with impacted students, so that they can begin planning their financing options before the fall semester starts.
Redirect: Encourage them to make an appointment with Financial Aid rather than trying to figure out the specifics on their own or through social media. Individual situations vary significantly.