The One Big Beautiful Bill Act

The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025 and includes major changes to federal student aid. These changes go into effect primarily on July 1, 2026, and impact:

• Federal grants (Pell & Workforce Pell)
• Student and parent loans (loan limits & eliminations)
• Repayment plans (simplified options)
• FAFSA eligibility and calculation rules

The Office of Student Financial Aid understands that parents and students have concerns about how these changes affect their ability to pay for college. A summary of the changes and how they will impact Undergraduate Students, Graduate Students and Parents.

Southern University and A&M College will stay current on the new regulations and will update this page as additional guidance is received from the Department of Education.

Pell Grant Eligibility Changes Effective with the 2026-27 Academic Year. The changes related to the FAFSA (SAI cap and inclusion of foreign income) are already live on the 2026-27 FAFSA.

• No more “Pellionaires”:
  • Closes the so-called “Pellionaire loophole” that allowed students and families with low incomes, but significant assets, to receive Pell
  • Students with an SAI equal to or greater than 14,790 (twice the maximum Pell Grant) are ineligible to receive a Pell Grant.
  • Some current students who received Pell Grants for the past two years through this loophole will lose eligibility in 2026-27.
    
    
•  No Pell Grant for students fully covered by non-federal grants and scholarships:
  • Students who receive grants or scholarships from non-federal sources (institutional, state, or private) that cover their entire cost of attendance (COA) are ineligible to receive a Pell Grant, even if otherwise eligible for the program.
  • Previously, a Pell-eligible student whose full COA was covered by non-federal sources could still receive a Pell Grant in addition to the non-federal aid.
  • This change will affect student-athletes on full-ride scholarships, as well as other students whose institutional, state, and/or private aid meet or exceed full COA. o Institutions can reduce non-federal aid to below the COA to preserve Pell Grants.
    
    
• Inclusion of foreign income in Pell determinations:
  • Foreign income is now included in the adjusted gross income (AGI) used to calculate Pell Grant eligibility on the FAFSA.
  • Families already listed foreign income on the FAFSA, but financial aid administrators previously had to manually review and determine if adding the foreign income to the AGI would make the student ineligible to receive the maximum Pell Grant.
  • This change to FAFSA makes this an automated o Some students and families with foreign income who received a Pell Grant for the past two years will lose eligibility in 2026-27.
    
    

Federal Student Loan Program: most changes become effective July 1, 2026

• Graduate & Professional Students
  • Graduate PLUS Loan program eliminated

Removes a longstanding federal funding option for graduate and professional students, who have historically been able to cover the full cost of attendance (both direct and indirect costs) through this program.

• Direct Unsubsidized Loan limits changed
  • Graduate student Direct Unsubsidized Loan annual limit unchanged ($20,500); new aggregate limit of $100,000 (not including undergraduate loans). The previous aggregate limit was $138,500, including undergraduate loans.
  • New professional student Direct Unsubsidized annual limit of $50,000; new aggregate limit of $200,000.
  • Additional Direct Unsubsidized Loan limits for certain health professions programs have been eliminated.
    
    
• Undergraduate Students
  • New limits for Parent Loan for Undergraduate Students (PLUS)
    • $20,000 per dependent student, per year (annual limit).
    • $65,000 per dependent student, in total (aggregate limit).
    • Historically, borrowers have been able to cover the full cost of attendance (both direct and indirect costs) through this program, as there was no specific limit.
    • LEGACY PROVISION: Parents who borrowed before July 1, 2026, may continue borrowing under the existing Parent PLUS Loan rules, which allow a PLUS loan up to the Cost of Attendance for up to 3 more academic years or until the student completes their program – whichever comes first.
      
      
  • Repayment Plan Changes to All Parent Borrowers
    • For Parent PLUS Loans taken out on or after July 1, 2026, the only repayment plan option available will be a new tiered standard repayment plan
    • The tiered standard repayment plan offers a fixed monthly payment over 10 to 25 years, based on the outstanding balance of the loan(s).
    • This applies to parent borrowers with existing Parent PLUS Loans who borrow a new loan on or after July 1, 2026, as well, because the law requires that all Parent PLUS Loans be repaid under the same repayment plan
    • Parents who currently have Parent PLUS loans in repayment and who borrow a Parent PLUS Loan on or after July 1, 2026, will have all their Parent PLUS Loans moved to the tiered standard repayment plan, potentially changing their monthly payments.
      
      
• All Students
  • New lifetime maximum of $257,500 for all federal student loans combined, excluding PLUS Loans.
  • New ability for institutions to impose a lower loan limit by program of study, creating an opportunity to address high loan default rates or high debt programs.
  • New requirement for institutions to adjust the annual loan limit for students enrolled less than full-time. If enrollment is less than full-time, your loan eligibility (annual amount) will be prorated (reduced).
    • Undergraduate students must enroll and complete a minimum of 12 hours each semester. If the student withdraws or drops course(s), their loans will be prorated.
    • A graduate student must enroll and complete a minimum of 9 hours each semester. If the student withdraws or drops course(s), their loans will be
      
      

Examples of Loan Proration:

Repayment Plan Changes Apply to All Borrowers

• Students who borrow a new federal Direct Loan on or after July 1, 2026, will be eligible for only two repayment plans:
  1. Tiered Standard Repayment
     • Fixed monthly payments
     • Repayment term lengths range from 10 to 25 years, depending on the amount
  2. Repayment Assistance Plan (RAP)
     • Monthly payments based on income
     • Loan forgiveness after 30 years of repayment
     • Is in a qualifying plan for Public Service Loan Forgiveness
       
       

Students who do not borrow a new federal Direct Loan on or after July 1, 2026, may continue to access current repayment options, including:

• Standard (10-year), Graduated, or Extended Repayment
• Income-Based Repayment (IBR)
• Pay As You Earn (PAYE)*
• Income-Contingent Repayment (ICR)*

The law sunsets the PAYE and ICR plans effective July 1, 2028. Borrowers who enroll in PAYE or ICR must switch to any of the other eligible plans listed before July 1, 2028, or they will be automatically moved into RAP.

FREQUENTLY ASKED QUESTIONS

For the purposes of this FAQ, the following definitions apply:

• Disbursement: Fund(s) have been applied to your student account
• New borrowers: Anyone who has not had a federal student loan disbursed prior to July 1, 2026.
• Less than half-time: Any undergraduate student attempting less than 6 credits in each term. Different credit levels may exist for graduate and professional students

1. Do these changes affect my 2025-2026 financial aid package?
   • Your current fall 2025/ spring 2026 /summer 2026 financial aid package will not be impacted by this new law.
     
     
2. Does this law affect my 2025-2026 Pell Grant eligibility?
   • No, your 2025-2026 Pell Grant award will not be
     
     
3. Will I still qualify for federal direct student loans if I am enrolled for less than 12 credits as an undergraduate student or 9 credits as a graduate/professional student?
   • Beginning with the 2026-27 school year, students enrolled less than full-time may have their loans adjusted
   • Students enrolled less than half-time are not eligible for federal student loan disbursement.
     
     
4. How much can I borrow annually as a graduate/professional student under the New Federal Direct Unsubsidized Loan Program?
   • Prior to July 1, 2026: Eligible graduate and law students can borrow up to $20,500
   • July 1, 2026, and Beyond: Eligible graduate students can borrow up to $20,500
   • Professional programs such as Pharmacy (Pharm.D.), Dentistry (D.D.S. or D.M.D.), Veterinary Medicine (D.V.M.), Chiropractic (D.C. or D.C.M.), Law (L.L.B. or J.D.), Medicine (M.D.), Optometry (O.D.), Osteopathic Medicine (D.O.), Podiatry (D.P.M., D.P., or Pod.D.), Clinical Psychology (Psy.D. or Ph.D.), and Theology (M.Div., or M.H.L.) can borrow up to $50,000 annually.
     
     
5. Is there a legacy provision for graduate and professional students who are currently enrolled?
   • If a borrower has a federal student loan (Direct Unsubsidized or Graduate PLUS) disbursed in their current academic program before July 1, 2026, the student can borrow under current annual and lifetime loan limits for three academic years or the remainder of their expected time to graduation, whichever is less.
     
     
6. How will the Graduate Plus Loan program change under the new Law?
   • Prior to July 1, 2026: If a borrower has a federal loan (Federal Unsubsidized or Grad PLUS) disbursed for their current academic program before July 1, 2026, the student can continue to borrow for three academic years or the remainder of their expected time to graduation, whichever is
   • July 1, 2026, and Beyond: New graduate and professional student borrowers are not eligible for the Graduate PLUS Loan
     
     
7. Are there additional options available to help me fund my education?
   • Graduate and professional students continue to have access to alternative student loans from various lenders.
   • Visit our alternative loan page at: https://www.elmselect.com/v4/school/1050/program-select for lender
     
     
8. What options do parents have if they need to take out more than $20,000 per year or if they have reached the $65,000 Lifetime Limit?
   • Parents and their students may research and apply for alternative student loans if they require additional funding.
   • Your financial aid package can contain both a Parent PLUS Loan and a private loan, but your total financial aid can never exceed the overall Cost
   • Visit our alternative loan page at: https://www.elmselect.com/v4/school/1050/program-select for the lender