2026-27 Updates

2026-27 Changes for Parent PLUS Loans    

Parents can borrow up to $20,000 per student per year, with a maximum lifetime limit of $65,000 

2026-27 Changes for Graduate PLUS Loans

Graduate PLUS loans are being eliminated and there are new lending limits through the Direct Unsubsidized Loan Program. 

Graduate students will have an Unsubsidized Loan limit of $20,500 per year ($100,000 lifetime) and professional students will have an Unsubsidized Loan limit of $50,000 per year ($200,000 lifetime).

The elimination of the Grad PLUS loans primarily impacts those seeking new Grad PLUS loans after July 1, 2026. The OBBA provides an exception (of three academic years) for a student who is already enrolled in a program of study and received a Grad PLUS loan for that program.

2026-27 Changes for Federal Loan Pogram Lifetime Loan Limits

There will be a $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).

Legacy Provision: If a borrower has a Federal Direct Loan made before July 1, 2026, while enrolled in a credential program, the borrower can continue to borrow under current loan limits for 3 academic years or the remainder of their expected time to credential, whichever is less. 

The OBBA made the following changes to the Pell Grant eligibility criteria, beginning with the 2026-27 award year. These Pell Grant Changes will be implemented with the official 26-27 FAFSA form by Oct. 1, 2025:

• The foreign earned income exclusion amount reported on the FAFSA form will be added to the Adjusted Gross Income (AGI) when determining Pell Grant eligibility.

• An applicant with an Student-Aid Index (SAI) equal to or greater than two times the maxiumum Pell Grant Award amount for the award year ($14,790 for 26-27) are ineligible for a Pell Grant

 *Note: This limit does not apply to students that qualify for the Pell Grant under the Special Rule (dependents of certain deceased service members and Public Safety Officers)     

Beginning with the 2026-27 academic year, the following assets will be excluded from the Student Aid Index (SAI) calculation and should not be reported as assets on the FAFSA form:

• The net worth of a family-owned business with 100 or fewer full-time (or full-time equivalent) employees.

• The net worth of a farm on which the family resides.

• The net worth of a commercial fishing business and related expenses, owned and controlled by a family. 

Previously, borrowers were required to have partial financial hardship and to not have certain types of ineligible loans to enter into the Income-Based Repayment (IBR) Plan. Effective July 4, 2025, under the OBBA the Income-Based Repayment Plan now has updated eligibility criteria, allowing the following types of borrowers to enroll: 

• Borrowers who do not have partial financial hardship

• Parent PLUS borrowers who have consolidated their parent PLUS loans into Direct Consolodation Loans and who have enrolled in the Income-Contingent Repayment (ICR) Plan immediately before enrolling in the IBR Plan.  (Note: To be considered enrolled in the ICR Plan, a borrower must make one full payment after entering the ICR plan)

What is not changing?

Monthly payments under IBR will continue to be capped an amount equivalent to the Standard Repayment Plan with a 10-year repayment period. Meaning, payments under the IBR plan will never be higher than payments on a Standard Repayment Plan with a 10-year repayment period. 

The OBBA does not change how a borrowers monthly payment amount is calculated. The following formulas remain in effect:

• Those who borrowed before July 1, 2014: The IBR Plan monthly payment amount calculation is based on 15% of a borrower’s discretionary income, with a 25-year repayment period.
• Those who first borrowed on or after July 1, 2014, or had no outstanding balance at the time they received a new loan on or after that date: The IBR Plan monthly payment amount calculation is based on 10% of a borrower’s discretionary income, with a 20-year repayment period.

Important Deadlines

Borrowers who have eligible loans taken out before July 1, 2026, are permitted to access the IBR, ICR, and Pay As You Earn (PAYE) Plans on or after July 1, 2026. There will be no restriction on enrolling in IBR, ICR, and PAYE after July 1, 2026, unless the borrower receives a disbursement on a new loan after July 1, 2026. Therefore:

• Borrowers who must consolodate in order to access the IBR, ICR, and PAYE Plans must have their consolodation loan disbursed no later than June 30, 2026, in order to access IBR, ICR, and PAYE. 

• Borrowers who must consolodate their Parent PLUS loans in order to access the IBR and ICR don't need to be enrolled in ICR before June 30, 2026, in order to eventually access IBR.

• Borrowers who receive disbursements on new loans or on a new consolodation loan on or after July 1, 2026, won't have access to the IBR, ICR, or PAYE even if they were previously enrolled in any of those plans. The Department of Education strongly encourages borrowers who must consolodate their loans in order to access the IBR, ICR, and PAYE Plans to apply for their consolodation loan at least three months before July 1, 2026, to ensure their consolodation loan is disbursed before July 1, 2026. 

• Current borrowers who have no new loans made on or after July 1, 2026 are eligible to enroll in the current Standard, Graduated, Extended, or curent Income Based Repayment Plans, and may also opt into the new Rapyment Assistance Plan (RAP) when available. 

• Current borrowers may also switch between, enter, or remain on existing ICR, PAYE, and SAVE plane until July 1, 2028. By July 1, 2028 current borrowers enrolled in ICR, PAY, or SAVE must transition to a different repayment plan (current IBR, current standard plans, or RAP). If no selection is made by that date, they will be moved to RAP automatically. 

U.S. Department of Education Updates

OBBA eliminates the ICR and the PAYE Plans entirely in the future. Other deadlines have not yet been determined

The Department of Education is working to update their systems and their loan servicers' systems to implement these changes. Expected timeline for these system changes to be complete will be Winter 2025. 

Repayment Plan Options After July 1, 2026

The new Income-Based Repayment Plan will be called the Repayment Assistance Plan (RAP). The new Standard Payment Plan will have 4 fixed terms of 10, 15, 20, or 25 years based on the amount borrowed (or outstanding balance if in repayment). 

New loans borrowed on or after July 1, 2026 can be repaid using only two plans: a new standard repayment plan and the new income-based repayment plan, RAP. If a borrower with new loans made on or after July 1, 2026 does not select a plan, they will be assigned to the new standard repayment plan.

All loans must be paid under the same repayment plan, so borrowers with loans made before July 1, 2026, who take out additional loans on or after July 1, 2026, will only have RAP and the new standard repayment plan as options.