There are important changes to federal financial aid regulations that may affect undergraduate and graduate students for the 2026-2027 academic year and beyond.
The One Big Beautiful Act (OBBB) was signed into law on July 4, 2025 and makes significant changes to federal financial aid programs, including new loan limits, new loan repayment options, and updated eligibility requirements, for both current and future students. H.R. 1 – One Big Beautiful Bill Act (Full Text).
Most changes take effect July 1, 2026 for the 2026-27 academic year.
The information on this page reflects Converse’s current understanding of these changes, as of May 2026. This page will be updated for the remainder of the 2025-26 academic year as the U.S. Department of Education issues implementing regulations and guidance.
Please refer to your specific student status when reviewing the changes below, as regulations may differ based on your enrollment status.
Below, are several resources and summaries to help students and families navigate these changes, including information organized by student type to simplify the review process as much as possible. While we hope these materials are helpful, we also recognize that every student’s situation is unique.
Our Student Financial Services team stands ready to answer questions and discuss how these changes may impact you individually. If you would like assistance or have questions after reviewing the information below, please contact Student Financial Services at 864-596-9019 or financialaid@converse.edu.
Student Status
Using the headers below, refer to your specific student status when reviewing the changes, as regulations may differ based on your enrollment status.
You are enrolled in an undergraduate program during the 2025-2026 academic year and will continue in 2026-2027
What’s Staying the Same
Undergraduate Loan Limits
No Change: Subsidized and Unsubsidized loan limits remain the same
- Annual: $5,500-$12,500 (based on year and dependency status)
- Total: $31,000 (dependent) or $57,500 (independent)
- U.S. Department of Education: Loan Amount Limits
What’s Changing
Parent PLUS Loan Limits
New limits: Updated annual and lifetime borrowing limits apply to Parent PLUS loans – limits are per student, not per parent borrower
- Annual: $20,000 per year, per student
- Total: $65,000 per student
Action: If you do not qualify for an exception and your parent(s) plan to borrow in excess of new limits, consider private education loan options
Reduced Annual Loan Limits for Part-Time Enrollment
Limited loan eligibility: If you enroll in fewer than12 credits for a semester, the amount you can borrow for the semester may be reduced
Example: If you enroll in 6 credits for the Fall semester (half of full-time), the portion of your annual loan limit attributable to the Fall will be reduced proportionally (also by half). If the amount you plan to borrow for the Fall exceeds the new limit, your Fall loan must be reduced to the new limit.
Example: If you enroll in 12 credits for the Fall semester and, at any point in the term, drop below full time (less than 12 credit hours), your Spring loan may be reduced.
Action: If you plan to enroll part-time and your federal loans are reduced leaving a funding gap, consider private education loan options. Please make sure to consult with Student Financial Aid before dropping any courses.
Pell Grant Eligibility
Updated eligibility criteria: Certain types of income/assets are either included or excluded for some students, and new eligibility limitations apply
- Certain Assets Excluded: Family businesses (≤100 employees), family farms, and commercial fishing operation assets will be excluded
- Foreign Income Included: Income from foreign sources will be added to adjusted gross income (AGI)
- Student Aid Index (SAI) limitation: Students with SAI ≥ $14,790 (2x the current maximum Pell award) will not be eligible
- Other grants and scholarships limitation: Students with total grants and scholarships from non-federal sources ≥ total estimated cost of attendance will not be eligible for Pell
Action: None required
Exception for Current Students (a.k.a. “legacy” or “grandfather” provisions)
Most current students qualify for an exception: If you qualify, new Parent PLUS limits don’t apply for up to three academic years
Your parent(s) may continue borrowing Parent PLUS loans under prior limits for up to 3 academic years (or the remainder of your academic program, whichever is less) if –
- you are enrolled as of June 30, 2026, and
- you or your parent(s) previously borrowed a federal loan for your academic program, and
- you remain in the same academic program through graduation
Key Detail: The OBBB does not provide exceptions for reduced annual loan limits for part-time enrollment or updated Pell Grant eligibility provisions. Both are effective July 1, 2026 for the 2026-27 academic year.
You are starting an undergraduate program at Converse in the Fall of 2026 or later
Pell Grants
The maximum Federal Pell Grant remains $7,395 for the 2026-27 academic year
Updated Eligibility Criteria
- Certain Assets Excluded: Family businesses (≤100 employees), family farms, and commercial fishing operation assets will be excluded
- Foreign Income Included: Income from foreign sources will be added to adjusted gross income (AGI)
- Student Aid Index (SAI) limitation: Students with SAI ≥ $14,790 will not be eligible for Pell
- Other grants and scholarships limitation: Students with total grants and scholarships from non-federal sources ≥ total estimated cost of attendance will not be eligible for Pell
Federal Student Loans:
No Change: Subsidized and Unsubsidized loan limits remain the same
Undergraduate Loan Limits
- Annual: $5,500-$12,500 (based on year and dependency status)
- Total: $31,000 (dependent) or $57,500 (independent)
- U.S. Department of Education: Loan Amount Limits
Parent PLUS Loan Limits
New limits: Updated annual and lifetime borrowing limits apply to Parent PLUS loans – limits are per student, not per parent borrower
- Annual limit: $20,000 per year per student
- Lifetime limit: $65,000 total per student
Key Detail: Unless Congress subsequently changes the lifetime Parent PLUS limit, families borrowing $20,000 in each of a student’s first three academic years will only be able to borrow $5,000 in the student’s 4th year.
Recommendation: If your parents plan to borrow in excess of new Parent PLUS limits, consider private education loan options
Reduced Annual Loan Limits for Part-Time Enrollment
Limited loan eligibility: If you enroll in less-than 12 credits for a semester, the amount you can borrow for the semester may be reduced
Example: If you enroll in 6 credits for the Fall semester (half of full time), the portion of your annual loan limit attributable to the Fall will be reduced proportionally (also by half). If the amount you plan to borrow for the Fall exceeds the new limit, your Fall loan must be reduced to the new limit.
Recommendation: If you plan to enroll part-time or drop below full-time, please contact the Student Financial Aid Office for guidance on how this will affect your current and future financial aid.
You are enrolled in a graduate or professional program for the 2025-2026 academic year and will continue in 2026-27
What’s Changing
- New Annual, Aggregate, and Lifetime Total Loan Limits
- Critical Change: Graduate PLUS loans are no longer available starting July 1, 2026 (most current students qualify for an exception)
| wdt_ID | wdt_created_by | wdt_created_at | wdt_last_edited_by | wdt_last_edited_at | Program Type | Annual Limit | Aggregate Limit | Lifetime Maximum |
|---|---|---|---|---|---|---|---|---|
| 1 | Deborah Peluso | 05/13/2026 08:30 AM | Deborah Peluso | 05/13/2026 08:30 AM | Graduate (all programs) | $20,500 | $100,000 | $257,500 (all undergrad, grad, and professional) |
Action: If you do not qualify for an exception and your program costs exceed new limits, consider private education loan options.
Full Time Graduate Enrollment Required for Loan Eligibility
You must be enrolled in six (6) graduate credit hours each semester to qualify for a federal direct loan. If you enroll less-than full-time (6 credits per semester- Fall, Spring, or Summer), you are not eligible for a Federal Direct Loan.
Action: If you plan to enroll part-time and your federal loans are reduced leaving a funding gap, consider private education loan options
Exception for Current Students (a.k.a. “legacy” or “grandfather” provisions)
Most current students qualify for an exception: If you qualify, you can borrow Graduate PLUS loans under prior limits for up to 3 academic years
You may continue borrowing Graduate PLUS loans under prior limits for up to 3 academic years (or the remainder of your academic program, whichever is less) if –
- you are enrolled as of June 30, 2026, and
- you previously borrowed a federal loan for your academic program, and
- you remain in the same academic program through graduation.
You are starting a graduate or professional program in the Fall of 2026 or later
Federal Student Loans
- New Annual, Aggregate, and Lifetime Total Loan Limits
- Critical Change: Graduate PLUS loans are no longer available starting July 1, 2026
| wdt_ID | wdt_created_by | wdt_created_at | wdt_last_edited_by | wdt_last_edited_at | Program Type | Annual Limit | Aggregate Limit | Lifetime Maximum |
|---|---|---|---|---|---|---|---|---|
| 1 | Deborah Peluso | 05/13/2026 08:30 AM | Deborah Peluso | 05/13/2026 08:30 AM | Graduate (all programs) | $20,500 | $100,000 | $257,500 (all undergrad, grad, and professional) |
Full Time Graduate Enrollment Required for Loan Eligibility
You must be enrolled in six (6) graduate credit hours each semester to qualify for a federal direct loan. If you enroll less-than full-time (6 credits per semester- Fall, Spring, or Summer), you are not eligible for a Federal Direct Loan.
Action: If you plan to enroll part-time and your federal loans are reduced leaving a funding gap, consider private education loan options.
You are currently in school and haven’t started repaying your loans yet
New and Updated Repayment Plans
Simplified Repayment Plan Options: After graduation (or otherwise ceasing enrollment), you’ll choose one repayment plan option for all your federal student loans
Standard Repayment Plan
- Fixed payments over 10-25 years (based on debt amount)
- Pays off loans fastest, lowest total interest
Repayment Assistance Plan (RAP)
- Income-based payments (minimum $10/month)
- Forgiveness after 30 years (360 payments)
- Good for variable income or public service careers
Income-Based Repayment (IBR)
- Only available if you borrowed prior to July 1, 2026 and do not borrow after July 1, 2026
- Payments capped at 10% of discretionary income
- Forgiveness after 20 years
Public Service Loan Forgiveness (PSLF)
PSLF continues: Current PSLF requirements continue until further notice
- Full-time work for qualifying employer (government/eligible nonprofit)
- payments made under a qualifying repayment plan
- 120 qualifying payments
Coming Soon: The U.S. Department of Education will clarify which new repayment plans qualify for PSLF, tentatively in the Summer of 2026
You’re currently repaying your student loans or are in deferment/forbearance
Transition To New Repayment Plans
Your existing federal loan terms are not changing: However, available repayment plan options are
You will receive more information about transitioning to an available repayment plan directly from your loan servicer.
If you are currently in a SAVE or PAYE repayment plan:
Critical change: Current SAVE and PAYE repayment plans are being eliminated
- Interest began accruing on August 1, 2025
- No payment requirement, but interest is accumulating
Recommendation: To avoid interest accumulation, contact your student loan servicer to select an available repayment plan as soon as possible.
Available Options after July 1, 2026
Standard Repayment Plan
- Fixed payments over 10-25 years (based on debt amount)
- Pays off loans fastest, lowest total interest
Repayment Assistance Plan (RAP)
- Income-based payments (minimum $10/month)
- Forgiveness after 30 years (360 payments)
- Good for variable income or public service careers
Income-Based Repayment (IBR)
- Only available if you borrowed prior to July 1, 2026 and do not borrow after July 1, 2026
- Payments capped at 10% of discretionary income
Forgiveness after 20 years
| wdt_ID | wdt_created_by | wdt_created_at | wdt_last_edited_by | wdt_last_edited_at | Current Plan | Transition Deadline | Comparable Plan Options |
|---|---|---|---|---|---|---|---|
| 1 | Deborah Peluso | 05/13/2026 08:50 AM | Deborah Peluso | 05/13/2026 08:50 AM | SAVE | July 1, 2028 | RAP or IBR |
| 2 | Deborah Peluso | 05/13/2026 08:50 AM | Deborah Peluso | 05/13/2026 08:50 AM | PAYE | July 1, 2028 | RAP or IBR |
| 3 | Deborah Peluso | 05/13/2026 08:51 AM | Deborah Peluso | 05/13/2026 08:51 AM | ICR | June 30, 2028 | RAP or IBR |
| 4 | Deborah Peluso | 05/13/2026 08:51 AM | Deborah Peluso | 05/13/2026 08:51 AM | IBR | No deadline | Remain in IBR or RAP |
| 5 | Deborah Peluso | 05/13/2026 08:52 AM | Deborah Peluso | 05/13/2026 08:52 AM | Standard | No deadline | Remain in Standard/Graduated/Extended, or New Standard (repayment term determined by total debt) |
| 6 | Deborah Peluso | 05/13/2026 08:52 AM | Deborah Peluso | 05/13/2026 08:52 AM | Graduated | No deadline | Remain in Standard/Graduated/Extended, or New Standard (repayment term determined by total debt) |
| 7 | Deborah Peluso | 05/13/2026 08:53 AM | Deborah Peluso | 05/13/2026 08:53 AM | Extended | No deadline | Remain in Standard/Graduated/Extended, or New Standard (repayment term determined by total debt) |
Parent PLUS Borrowers
Alert: New Parent PLUS loans taken after July 1, 2026 are limited to $20,000/year and $65,000 lifetime limits per child
For some families, an older child who is currently in college may qualify for an exception (prior loan limits apply), while new loan limits apply to a younger sibling in the same academic year.
For Parent PLUS loans taken prior to July 1, 2026:
- Parent Borrowers must use the Standard Repayment Plan (no penalty for early repayment)
- May not use RAP
- May consolidate to access ICR, but must transition out of ICR by June 30, 2028
Public Service Loan Forgiveness (PSLF)
PSLF continues: Current PSLF requirements continue until further notice
Requirements:
- Full-time work for qualifying employer (government/eligible nonprofit)
- Payments made under a qualifying repayment plan
- 120 qualifying payments
Transition details:
- Payments made on SAVE/PAYE/ICR should count toward PSLF
- Must select a new qualifying plan by deadlines
- RAP and amended IBR expected to qualify (awaiting confirmation)
Recommendations:
- Continue making qualifying payments
- Submit Employment Certification Forms annually
- Monitor guidance on qualifying plans
- Plan transition before deadlines
Coming Soon:Department of Education will clarify which new plans qualify for PSLF and how payment counts transfer, tentatively in the Summer of 2026
Updated Tax Benefits
Employer-Provided Educational Assistance (Section 127):Up to $5,250 annually tax-free, increasing with inflation starting in 2026
- Can be used for student loan repayment or tuition
- Check if your employer offers this benefit
Other notable tax changes:
- Student loan interest deduction: Up to $2,500 (income limits apply)
- Loan discharge on death/disability: Not taxable income (made permanent)
Borrower Defense and Closed School Discharge
Biden-era regulations delayed and modified: Claims may be reviewed under different standards with potentially longer processing times
Coming Soon: Department of Education will issue new regulations governing borrower defense claims and closed school discharges, tentatively in the Summer of 2026
Coming Soon: Department of Education will provide detailed guidance on plan transitions, payment count transfers, and RAP payment calculations, tentatively in the Summer of 2026
Resources
Additional Resources from StudentAid.gov
- Federal Student Loans
- Understanding Student Loan Repayment
- Student Loan Repayment Plans
- Find Your Loan Servicer
- Federal Versus Private Loans
Questions? We’re here to help!
Student Financial Aid Office
financialaid@converse.edu | 864-596-9019