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Federal Student Loan Updates

Changes to 2026-2027 Federal Student Loans

Congress passed the One Big Beautiful Bill Act (OBBBA) in July 2025, which introduced several changes to federal student loans beginning July 1, 2026. Students who have already borrowed federal loans for their current academic program may be considered a “continuing borrower” and therefore grandfathered in if enrolled in the same academic program through June 30, 2026. The information below is intended to help you understand how these changes may apply to you.

Current Borrowers

These changes do not affect the current academic year. Additionally, students and parents who have borrowed under the Federal Direct Loan Program before July 1, 2026, may continue to access loans under the expiring limits for up to three additional years, or for the remaining time needed to complete your current degree. This is calculated by the minimum length of your program, less the amount of time you have completed, whichever is sooner. 

Upcoming Changes to Federal Student Loan Limits

The following are new borrowing limits under the Federal Direct Loan Program, effective July 1, 2026:

  • Graduate programs: Limited to $20,500 per year or $100,000 for the degree.
  • Undergraduate programs: Student borrowing remains unchanged, but Parent PLUS Loans will be capped at $20,000 per year and $65,000 for the degree.

Private Loan Options

Private loans have long been available to students and families who seek to borrow outside the federal program. Iona maintains a preferred private lender list to help students to review some options. There are important differences between federal loans and private loans, and between private lenders. We encourage you to review available options and lenders should you need to borrow. For additional details on private loans, please refer to the private loans page.

Frequently Asked Questions (FAQs) About the One Big Beautiful Bill Act (OBBBA) and Private Loans

Section 1: Federal Loan Changes Under OBBBA

The One Big Beautiful Bill Act (OBBBA), passed by Congress in July 2025, introduces changes effective July 1, 2026, without affecting borrowing for the 2025–26 academic year. Highlights include:

Federal Loan Borrowing Caps:

  • Graduate Borrowers: Direct Unsubsidized Loans are limited to $20,500 per year and a $100,000 total cap for the degree.
  • Professional Programs: Direct Unsubsidized Loans can be up to $50,000 per year with a $200,000 lifetime borrowing limit.
  • Undergraduate and Parent PLUS Loans: As of July 1, 2026, Parent PLUS Loans are capped at $20,000 per student per year, with a $65,000 lifetime limit. Undergraduate annual loan limits will not change, but count toward a new lifetime limit.
  • Graduate, Professional, and Undergraduate Programs will all be subject to a prorated loan model for awards.  Previously, if you were enrolled at least half-time, you could often access your full annual loan limit. Starting July 1, 2026, annual federal loan eligibility will scale directly with credit load.

OBBBA uses a "fractional" math formula. Your annual loan limit is multiplied by the percentage of a full-time load you are taking.

  • Undergraduate Example: Full-time is 24 credits per year and you take 12 credits (6 credits for fall and six for spring), you are eligible for 50% of your annual limit.
  • Graduate/Legacy Example: If your program considers 18 credits a full year and you take 9, you are eligible for 50% of the $20,500 limit ($10,250).

YES, even though you received a disbursement before July 1, 2026 for your current program, and you fall under the Legacy Provision, you are subject to this rule.

Please be aware that withdrawing from a course during the term may impact your financial aid eligibility, including your federal student loans for a future term.

For example, if you are enrolled in 12 credits during both the fall and spring semesters, you are considered full-time for the academic year. However, if you withdraw from a course in the fall semester and receive a “W,” your completed enrollment for the academic year may be reduced below full-time status (fewer than 24 completed credits). This could result in a reduction of your loan eligibility in a subsequent term.

Before withdrawing from any course, we strongly encourage you to speak with the Student Financial Services (SFS) Office to review how the change may affect your financial aid.

Graduate PLUS Loans will be phased out starting July 1, 2026, for new borrowers. Existing borrowers may continue to borrow under the generally higher limits for the duration of their degree, subject to some limitations.

  • Students must have borrowed a federal Direct Loan (Subsidized, Unsubsidized, or PLUS) in their current program before July 1, 2026.
  • The eligibility period, while up to three years or the completion of your degree (whichever is sooner), is also limited by the minimum length of your program minus the time you have been enrolled.

Under OBBBA, the overall lifetime borrowing limit for federal student loans, excluding Parent PLUS loans, is $257,500. This applies to students starting a new program on or after July 1, 2026.

Section 2: Grandfathering, New and Continuing Borrower Status

The grandfathering rule may allow students who have borrowed any federal student loan before July 1, 2026, and stay enrolled in the same academic program through June 30, 2026, to continue to borrow under the generally higher limits for the duration of their degree, subject to some limitations.

  • Students must have borrowed a federal Direct Loan (Subsidized, Unsubsidized, or PLUS) in their current program before July 1, 2026.
  • The eligibility period, while up to three years or the completion of your degree (whichever is sooner), is also limited by the minimum length of your program minus the time you have already completed.