Federal Aid Changes: What to Expect from the Reconciliation Bill – “One Big Beautiful Bill Act”
The One Big Beautiful Bill Act (OBBBA), signed into law July 4, 2025, introduces significant changes to federal student aid, many of which will take effect beginning July 1, 2026. Additional guidance from the U.S. Department of Education is still pending, and details may change as implementation guidance becomes available.
The information provided reflects our current understanding of federal financial aid changes under OBBBA and is not legal advice. Details, including eligibility, transition rules, and timelines, remain subject to federal rulemaking and guidance from the U.S. Department of Education.
Students are encouraged to contact the Office of Graduate Financial Aid with questions about their individual situation and to monitor updates at studentaid.gov. Loyola is committed to supporting students through these changes and will update this page as new information becomes available.
Key Highlights
- New federal loan limits and repayment options go into effect July 1, 2026 (see below for details).
- Legacy provisions will protect many current borrowers from changes.
- Graduate PLUS Loans will be eliminated for graduate students who begin their degree program starting after June 30, 2026.
- Repayment plans will include only two options:
- Standard Repayment Plan
- Repayment Assistance Plan (RAP) - replacing all current income-driven repayment (IDR) plans
Current Graduate Students (enrolled prior to July 1, 2026)
This section applies to students who are currently enrolled in a graduate program prior to July 1, 2026.
If you meet both criteria below, you may qualify for the legacy provision:
- You began enrollment in a degree-seeking graduate program prior to June 30, 2026, and
- You have borrowed federal loans under your current graduate program.
Students who meet these criteria may continue under previous federal loan rules for the expected time to complete their program or up to three academic years, whichever comes first.
Students who do not met the criteria for the legacy provision should refer to the New Graduate Students section below.
Is the Federal Direct Graduate PLUS Loan being eliminated?
Yes. The Graduate PLUS Loan program will be eliminated for new borrowers beginning July 1, 2026. However, current graduate students may qualify for a legacy provision if they have already borrowed federal loans for their current program.
What is the "legacy provision"?
If you borrowed federal student loans for your current graduate program before July
1, 2026, you may continue borrowing under previous loan rules (including Grad PLUS,
if applicable).
• This applies only to your current graduate program.
• You cannot opt into or out of the legacy provision.
• The legacy provision will last for up to three academic years or until you finish
your current program, whichever comes first.
Do my federal loan borrowing limits change?
If you remain eligible under the legacy provision:
• Your current borrowing limits will remain the same, with an aggregate limit of
$138,500 for graduate or professional students. This total includes all federal loans
received for undergraduate study.
If you lose legacy eligibility or never borrowed before July 1, 2026:
• Graduate students: Up to $20,500/year (unsubsidized loans)
• Professional students (Loyola Psy.D. students): Up to $50,000/year (unsubsidized
loans)
• Lifetime borrowing limits: $100,000 for graduate students; $200,000 for professional
students. However, there is also a new lifetime aggregate limit for all undergraduate, graduate, and professional federal loans of $257,500, regardless of
whether earlier loans have been repaid or forgiven (not including Grad PLUS or Parent
PLUS loans).
Does prior borrowing (loans received for undergraduate study or for another graduate program) count for legacy provision eligibility?
No. The legacy provision applies only to your current graduate program.
Can I lose my eligibility for the legacy provision?
Yes. You will lose your legacy provision eligibility if you:
• Withdraw from all courses during a semester, or
• Skip (are not enrolled) a semester, or
• Take a leave of absence from your current program.
What happens if I lose my legacy provision eligibility?
If you lose your legacy eligibility, you will:
• No longer be eligible for Grad PLUS loans.
• Be limited to the new federal loan caps.
You may need to consider other funding options, such as private loans, scholarships
or grants, and payment plans. Additional details are available on our Other Types of Aid webpage.
What is loan "proration"?
Proration means your loan eligibility is reduced if you are enrolled less than full-time.
Example: A half-time student may only qualify for approximately half of the annual
loan limit.
Please review the Loan Proration section below for additional details.
Are loan repayment options changing?
Yes. For loans disbursed on our after July 1, 2026, the new law replaces most existing income-driven repayment plans with a new federal repayment framework. If you borrow additional loan funds on or after this date, your repayment options will be limited to a tiered Standard Plan (10-25 years) and the Repayment Assistance Plan (RAP). Additional guidance from the federal government is expected as details are finalized. For more information, visit https://studentaid.gov/h/manage-loans.
Is Public Service Loan Forgiveness (PSLF) still available?
Yes, Public Service Loan Forgiveness (PSLF) will continue, and eligible borrowers can still work toward loan forgiveness. However, changes to repayment plans may affect eligibility pathways, and updated federal regulations (effective July 1, 2026) may change what qualifies as an eligible employer. More details will be provided as federal guidance is finalized. For more information, visit https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service.
New Graduate Students (starting July 1, 2026 or later)
This section applies to students who plan to begin a graduate program on or after July 1, 2026, as well as current students who do not meet the criteria for the legacy provision.
Is the Grad PLUS loan available?
No. The Grad PLUS loan will no longer be available to new borrowers.
What federal loans are available?
Graduate students may borrow Federal Direct Unsubsidized Loans only.
What are the new loan limits?
• Graduate students: Up to $20,500/year (unsubsidized loans)
• Professional students (Loyola Psy.D. students): Up to $50,000/year (unsubsidized
loans)
• Lifetime borrowing limits: $100,000 for graduate students; $200,000 for professional
students. However, there is also a new lifetime aggregate limit for all undergraduate,
graduate, and professional federal loans of $257,500, regardless of whether earlier
loans have been repaid or forgiven (not including Grad PLUS or Parent PLUS loans).
What if my program costs exceed the federal loan limits?
You may need to explore:
• Private student loans
• Scholarships or assistantships
• Employer tuition support
• Payment plans
This is a significant change from previous rules where Grad PLUS allowed students
to borrow up to the full cost of attendance.
What is loan "proration"?
Proration means your loan eligibility is reduced if you are enrolled less than full-time.
Example: A half-time student may only qualify for approximately half of the annual
loan limit.
Please review the Loan Proration section below for additional details.
Are loan repayment options changing?
Yes. For loans disbursed on our after July 1, 2026, the new law replaces most existing income-driven repayment plans with a new federal repayment framework. If you borrow additional loan funds on or after this date, your repayment options will be limited to a tiered Standard Plan (10-25 years) and the Repayment Assistance Plan (RAP). Additional guidance from the federal government is expected as details are finalized. For more information, visit https://studentaid.gov/h/manage-loans.
Is Public Service Loan Forgiveness (PSLF) still available?
Yes, Public Service Loan Forgiveness (PSLF) will continue, and eligible borrowers can still work toward loan forgiveness. However, changes to repayment plans may affect eligibility pathways, and updated federal regulations (effective July 1, 2026) may change what qualifies as an eligible employer. More details will be provided as federal guidance is finalized. For more information, visit https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service.
All Students - Loan Proration
Starting July 1, 2026, for both undergraduate and graduate students enrolled less than full-time, federal law requires institutions to prorate annual loan amounts based on their enrollment status. This means your loan eligibility will be reduced proportionally if you are enrolled less than full-time. This rule applies to all students, including those who qualify under the Legacy Provision.
For examples of loan proration, visit our Graduate Loan Proration Examples webpage.
What Should Graduate Students Do Now?
Here's how you can plan ahead for these changes:
- Current students may consider borrowing federal loans before July 1, 2026 (if possible and appropriate for your circumstances).
- Explore scholarships, assistantships, and other alternative funding options.
- Make sure you understand the impact of proration on your borrowing if your enrollment fluctuates.
- Plan your repayment strategy before borrowing new loans under the new rules.
- Stay informed as federal guidance evolves.
If you have questions about how these changes impact you, please contact the Graduate Financial Aid office at gradfinancialaid@loyola.edu.
Last Updated: April 17, 2026
Notes
Actual loan amounts may vary based on individual eligibility, program structure, and timing of disbursements.
Effective date and implementation details are pending and may be subject to change in accordance with final regulations.