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Federal Student Loan Updates

The One Big Beautiful Bill Act (OBBB)

Enacted July 2025, the One Big Beautiful Bill Act (OBBB) made significant changes to federal student loan programs as part of broader fiscal policy reforms.

While there are no changes to federal student loans for the 2025–26 academic year, the provisions of the Act are scheduled to take effect beginning July 1, 2026.

Iona University is actively monitoring these developments and will update this page as additional clarification from the U.S. Department of Education (ED) becomes available.

Please Note:

  • There are no changes to financial aid for the 2025–26 academic year resulting from this legislation.
  • Students beginning graduate programs before July 1, 2026 may still be eligible for Grad PLUS loans under current rules. Specific transition guidance is expected but not yet available.

Important Disclaimer

The information on this page is provided by Iona Student Financial Services to help students understand the evolving landscape of federal student loan programs. While based on our best interpretation of current federal updates, it does not represent official guidance.

Students should refer to official federal sources for definitive information: studentaid.gov.

What We Know (as of September 2025)

Grad PLUS Loans

  • Phase-Out Date: Beginning July 1, 2026, new Grad PLUS Loans will no longer be available for new borrowers.
  • Continuing Eligibility: Existing Grad PLUS borrowers may remain eligible to borrow under current rules while completing their current academic program.

New Graduate Unsubsidized Direct Loan Limits (Effective July 1, 2026)

  • Professional Programs (e.g., Medicine, Law): Up to $50,000 per year, with a $200,000 lifetime borrowing limit.
  • Other Graduate Programs: Up to $20,500 per year, with a $100,000 lifetime borrowing limit.
  • The definitions of “professional” versus “graduate” programs are still being clarified by ED (see below).
  • Existing Unsubsidized Loan borrowers can continue under current limits until completing their current program or for three additional years, whichever is shorter.

Undergraduate Limits and Parent PLUS Loans

  • No changes are planned for undergraduate loan amounts; however, undergraduate borrowing will now count toward the new lifetime limits.
  • Beginning July 1, 2026, Parent PLUS Loans will be capped at $20,000 per student per year, with a $65,000 lifetime limit per dependent student.
  • Current Parent PLUS borrowers (those who borrowed before July 1, 2026) may continue under current limits for three years or until the student’s program ends, whichever comes first.

Public Service Loan Forgiveness (PSLF)

  • No changes to PSLF under the OBBB.
  • However, separate regulatory proposals may affect PSLF eligibility in the future.

What Remains Unclear

Definition of “Professional” vs. “Graduate” Programs

  • ED has not yet finalized how “professional” programs—those potentially eligible for higher borrowing caps—will be defined.
  • Current drafts use vague terms such as “not limited to” and “generally requires licensure.”
  • Guidance is needed on how dual-degree and non-licensure programs will be classified.

Grad PLUS Loans for Existing Borrowers

  • It's uncertain if current students who remain eligible for Grad PLUS loans after July 1, 2026, can choose to decline Grad PLUS in order to access the new $50,000 Unsubsidized loan cap.
  • It’s uncertain, but the current indication is that a student who borrows any Direct Loan or Grad PLUS before July 1, 2026, will remain eligible to borrow a Grad PLUS loan for the “3-year or until program completion” window so long as that student remains in the same program at the same school for which they borrowed the pre-July 1, 2026 loan.
  • Awaiting further guidance from ED.

Loan Proration for Part-Time Students

  • The OBBB includes a provision to prorate loan amounts based on enrollment level.
  • This could mean that part-time students will be eligible for only a portion of the annual loan limit.
  • Clarification from ED is needed on how this will apply to both undergraduate and graduate borrowers.

New Repayment Plans

  • For loans disbursed after July 1, 2026, current income-driven repayment plans (IBR, PAYE, SAVE) will be replaced by a new Repayment Assistance Program (RAP).
  • Borrowers who take new loans on or after July 1, 2026, will be limited to the RAP or standard repayment plans for those new loans.
  • RAP borrowers will not be required to commit to a 30-year repayment period; standard plans ranging from 10 to 25 years will remain available.
  • Borrowers with only pre–July 1, 2026 loans can remain in their current repayment plans or opt in to the new RAP.
  • Borrowers currently in ICR, PAYE, or SAVE must transition to a new plan by July 1, 2028. If no plan is selected, they will automatically be placed into RAP.
  • Additional RAP details are forthcoming.

Additional Resources

For official updates and analyses, please visit: