One Big Beautiful Bill Act and Graduate PLUS Loan Changes
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Modular Offices, Building 29Navigating Federal Aid Changes (OBBBA)
The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, introduces the most significant reforms to federal student aid in decades. While these changes do not affect the 2025-26 academic year, they will fundamentally change how students and parents finance education starting July 1, 2026. We put this resource together to help you understand and navigate some of the major changes. If you have any questions, feel free to reach out to our Student Services Center.
Important disclaimer: Information below is based on current guidance and is subject to change. The Department of Education is expected to issue final regulations in late spring 2026.
Key Changes to Federal Student Loans
1. Phase-Out of Graduate PLUS Loans
For new borrowers starting after July 1, 2026, the Graduate PLUS loan program will be eliminated. Graduate students who do not meet the Legacy Provision will need to rely on unsubsidized loans and/or private education loans to cover their remaining costs.
2. New Direct Unsubsidized Loan Limits
The law establishes new annual and lifetime (aggregate) limits based on your degree type.
| Student Category | Annual Limit | Program Limit |
|---|---|---|
| Graduate Students (Most Programs) | $20,500 | $100,000 |
| Graduate Students Enrolled in Doctoral Psychology or Master of Divinity | $50,000 | $200,000 |
| Undergraduate and Professional Undergraduate Students | No changes | No changes |
3. Changes for Undergraduate Parent Loans (Parent PLUS)
Parent PLUS loans will remain available but will now have “hard caps” (shown below). This section applies to parents of dependent undergraduate students. It does not affect Graduate PLUS loans:
- Annual Cap: $20,000 per student
- Lifetime Cap: $65,000 per student
4. Enrollment Proration
Starting July 1, 2026, federal law requires institutions to prorate annual loan amounts based on your enrollment status. If you are enrolled less than full time, your loan eligibility will be reduced proportionally. This rule will apply to all students, including those who fall under the Legacy Provision.
Example: If you are a half-time graduate student, you may be eligible only for 50% of the annual $20,500 limit.
The Legacy Provision
If you are enrolled and borrowing federal loan funds prior to July 1, 2026, you may be eligible to continue under the “old” rules (including access to Graduate PLUS loans) through a Legacy Provision.
To qualify for the Legacy Provision, you must meet ALL three requirements:
- Enrolled: You must be admitted, enrolled, and attending classes in your current program prior to July 1, 2026.
- Borrowed: You must have received a Direct Unsubsidized or PLUS loan for your current program prior to July 1, 2026.
- Timeline: You may remain under this provision only for the lesser of three years or the remaining time to complete your specific program.
Loss of Legacy Provision
Students who meet the Legacy Provision will lose the exception and be subject to the new more restrictive rules if any of the following occur after July 1, 2026:
- Student changes their program of study (not including changes of Major for undergraduate programs).
- Student withdraws from all courses within a term after beginning attendance.
- Student takes a Leave of Absence.
What You Should Do Now
- Review Your History: Log in to studentaid.gov to check your total lifetime borrowing.
- Secure Legacy Status: If you have not yet taken out a federal loan for your current program, doing so prior to July 1, 2026, may protect your ability to use PLUS loans for the next three years.
- Plan Your Program: Avoid program changes or “academic pauses” after July 1, 2026, as these may trigger a loss of legacy status. Specifically, maintain continuous enrollment. Withdrawing or taking a leave of absence after July 1, 2026, may break your legacy status and force you into the new, lower loan limits upon return.
- Submit Your FAFSA: Complete the 2025-26 FAFSA immediately if you are starting in summer 2026.
- Explore Private Options: You can research private credit-based loans via our Private Loan Portal (ELMSelect).
- Explore Scholarship Options: Check out APU’s scholarship search software, ScholarshipUniverse, to see what free internal and external scholarship opportunities might be available to you.
Frequently Asked Questions (FAQs)
Because Graduate PLUS loans will end for new borrowers, students should:
- Apply early: Borrow before July 1, 2026.
- Explore scholarships, grants, and assistantships (tuition waivers or funded research/teaching roles).
- Consider federal unsubsidized loans within new caps.
- If needed, look at private loan options carefully (they often have higher interest rates and fewer protections).
To be “grandfathered” in and retain access to Graduate PLUS loans (which are otherwise discontinued or restricted for new borrowers), you generally must have had any Federal Direct Loan (Unsubsidized or PLUS) disbursed for your current academic program before July 1, 2026. You are generally considered a continuing borrower if you received a Graduate PLUS loan or any Unsubsidized Federal Direct Loan.