As part of the One Big Beautiful Bill Act (OBBBA), new federal financial aid rules were signed into law in July 2025, changing federal loan and Pell Grant eligibility. These changes will take effect on July 1, 2026.
This information is intended to inform parents and students about upcoming changes and how to navigate and prepare for the pending changes to some federal aid programs. For more information about the new Federal Financial Aid law, visit the National Association of Student Financial Aid Administrators' site.
Listed below are changes that will affect undergraduate and graduate students.
Undergraduate Students
Graduate Students
Schedule of Reductions Calculation Examples
Prevents students from receiving Pell Grants if their SAI exceeds twice the maximum Pell Grant award.
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 otherwise eligible for the program.
Students enrolled less than full-time will see a reduction of federal loans in direct proportion to the student’s actual enrollment. (Student eligibility is determined at the time of disbursement. If a student is enrolled full-time at the time of disbursement but later drops or withdraws, a loan reduction may occur in the following semester. For new borrowers, Parent Plus loan maximum
For new borrowers, Parent Plus loan maximum annual amount of $20,000/year and an aggregate maximum of $65,000/dependent student (if the student or parent borrower has a Federal Direct Loan made before July 1. 2026, while the dependent student is enrolled in a program of study, the parent can continue to borrow under current loan limits for 3 academic years or the remainder of their dependent student’s expected time to graduate, whichever is less)
Elimination of the Graduate Plus loan for new borrowers (if a borrower has a Federal Direct Loan made before July 1, 2026, while enrolled in a program of study, the borrower can continue to borrow from the program for the 3 academic years or the remainder of their expected time to degree/certificate, whichever is less)
Caps the annual limits at $20,500 for graduate students and $50,000 for professional students. The aggregate limit is capped at $100,000 for graduate students and $200,000 for professional students (if a borrower has a Federal Direct Loan made before July 1, 2026, while enrolled in a program of study, the current loan limits continue to apply for 3 academic years or the remainder of their expected time to graduation, whichever is less.
$257,500 lifetime borrowing limit on all federal student loans, excluding borrowed Parent PLUS loan amounts (in the case of a dependent student who had Parent PLUS borrowed on their behalf for education expenses). If a borrower has a Federal Direct Loan made before July 1, 2026, while enrolled in a credentialed program, the borrower can continue to borrow under current loan limits for 3 academic years or the remainder of their expected time to graduation, whichever is less.
The Schedule of Reductions (SOR), under the One Big Beautiful Bill Act, is a mathematical equation that is used for reducing the annual amount of a Direct Loan (Subsidized, Unsubsidized, and Graduate PLUS) that a student may borrow when they are enrolled on less than fulltime basis during an academic year.
Full time annual limit: $20,500 per Academic Year
Required Enrollment to be considered Full-Time: 18 Credit Hours Per Academic Year
Actual enrollment: 12 credits per Academic Year/6 Credit Hours Per Term
Calculation
12÷18=0.6667" " ("≈ 67\%" ) ⇒ 20,500×0.67=$13,735 Maximum Fall Award = $6,868/Maximum Spring Award = $6,867
Full time annual limit Subsidized: $3,500 per Academic Year
Full time annual limit Unsubsidized: $2000 per Academic Year
Required Enrollment to be considered Full-Time: 24 Credit Hours Per Academic Year
Actual enrollment: 12 credits per Academic Year/6 Credits Hours Per Term
Subsidized Calculation
12÷24=0.50("≈ 50\%" ) ⇒ 3,500×0.50=$1,750 Maximum Fall Award = $875/Maximum Spring Award = $875
Unsubsidized Calculation
12÷24=0.50("≈ 50\%" ) ⇒ 2000×0.50=$1,000 Maximum Fall Award = $500/Maximum Spring Award = $500
Full time annual limit Subsidized: $5,500 per Academic Year
Full time annual limit Unsubsidized: $7000 per Academic Year
Required Enrollment to be considered Full-Time: 24 Credit Hours Per Academic Year
Actual enrollment: 18 credits per Academic Year/9 Credits Hours Per Term
Subsidized Calculation
18÷24=0.75("≈ 75\%" ) ⇒ 5,500×0.75=$4,125 Maximum Fall Award = $2063/Maximum Spring Award = $2062
Unsubsidized Calculation
18÷24=0.75("≈ 75\%" ) ⇒ 7000×0.75=$5,250 Maximum Fall Award = $2625/Maximum Spring Award = $2625
