Federal Student Aid Changes Coming in 2026

Definition: Federal loans borrowed in the student's name that must be repaid after graduation or if the student drops below half-time enrollment or leaves school.

What's Changing on July 1, 2026

• The Grad PLUS Loan program will be discontinued and will not be available to new borrowers.
• Legacy Provision: Students who received a Grad PLUS Loan for their current program prior to July 1, 2026, may continue borrowing under existing Grad PLUS Loan rules for the remainder of their program's published length, subject to federal eligibility requirements.

Borrowing limits will be capped as follows:

• Undergraduate: no changes
• Graduate (unsubsidized only): $20,500 per year, up to $100,000 lifetime. Total maximum loan limit including maximum undergraduate borrowing, $157,500.

• Professional degrees (e.g., law and pharmacy): $50,000 per year, up to $200,000 lifetime (includes any undergraduate and graduate federal student loan borrowing). Total maximum loan limit including maximum undergraduate borrowing, $257,500.

  Interim Guidance for Puget Sound Students: Based on current U.S. Department of Education guidance, students enrolled in Puget Sound's Physical Therapy and Occupational Therapy programs may be eligible to borrow up to $50,000 annually in Direct Unsubsidized Loans. Eligibility for the additional loan amount is not automatically awarded and must be reviewed and approved on a case-by-case basis through Student Financial Services.
  
  At this time, Physical Therapy and Occupational Therapy are the only Puget Sound graduate programs being treated as eligible for the higher professional degree loan limits under current federal guidance. All other graduate programs at Puget Sound remain subject to the standard graduate annual loan limit of $20,500 and aggregate loan limit of $100,000.
  
  Federal guidance remains subject to change, and borrowing eligibility may be revised if additional guidance is issued by the U.S. Department of Education.

• Total lifetime borrowing limit for all federal student loans (except Parent PLUS Loans): $257,500.
• Enrollment Status: Students enrolled less than full-time will have their annual loan eligibility prorated (reduced).

What This Means for You

• Current Grad PLUS borrowers: If you received a Grad PLUS Loan for your current program prior to July 1, 2026, you may continue borrowing under existing Grad PLUS Loan rules for the remainder of your program's published length, subject to federal eligibility requirements.
• Prospective graduate students: Grad PLUS Loans will not be available beginning with the 2026-27 academic year. Students will need to rely on Direct Unsubsidized Loans (within the applicable federal limits), scholarships, savings, employer assistance, or private education loans.
• Physical Therapy and Occupational Therapy students: Under current federal guidance, students enrolled in Physical Therapy and Occupational Therapy programs may be eligible to request additional Direct Unsubsidized Loan funding up to the $50,000 annual limit available to certain professional degree programs. If students are interested in the additional Direct Unsubsidized Loan they must reach out to Student Financial Services to request the additional amount. Requests are reviewed individually by Student Financial Services and are not automatically included in a student's financial aid offer.
• Students in all other graduate programs: Graduate students enrolled in programs other than Physical Therapy and Occupational Therapy remain subject to the standard federal Direct Unsubsidized Loan limits of $20,500 per year and $100,000 aggregate borrowing.
• All graduate students: Connect with Student Financial Services for one-on-one guidance regarding how these federal changes may affect your financing options.
  
  Please Note: Federal implementation of the One Big Beautiful Bill Act (OBBBA) is ongoing. The information on this page reflects current guidance from the U.S. Department of Education and may be updated as additional federal guidance becomes available.

Definition: Federal loans borrowed by parents to help pay for a child's undergraduate education. Parents - not students - are responsible for repayment.

What's Changing on July 1, 2026

• New Borrowers on or after July 1, 2026: Parents may borrow up to $20,000 per year, with a $65,000 lifetime maximum per student.
• Legacy Provision: Parents who borrowed before July 1, 2026 may continue borrowing under existing Parent PLUS Loan rules for up to 3 more academic years or the student completes their program ends - whichever comes first.
• Enrollment Status: PLUS Loan eligibility is tied to the student's cost of attendance and enrollment level. If a student is enrolled less than full-time, the PLUS loan amount borrowed will be prorated (reduced).

What This Means for You

• Current Parent PLUS borrowers: You may still borrow under the old rules for the length of the Legacy Provision (see above).
• New Parent PLUS borrowers: Be aware of the new caps listed above. Families may need to plan for additional funding sources, including private loans.

Definition: After a student graduates, drops below half-time enrollment status, or leaves school, they are required to repay their federal student loans under a chosen repayment plan.

We encourage any borrower who is currently in repayment of their federal loans to contact their loan servicer and discuss how these changes may impact their situation. This website provides a high-level overview, and there may be other details a current borrower in repayment will want to consider before deciding how to proceed.

What's Changing on July 1, 2026

• Some existing repayment plans will end (ICR, PAYE, and SAVE).
• A new income based repayment plan (Repayment Assistance Plan, or RAP) will be created. Payments under this plan will be determined based upon several factors:
  • payments may be as low as $10/month,
  • adjusted for dependents,
  • and possibly forgiven after 30 years of payments.
• A new standard repayment plan will be created. Payments under this plan will have 4 fixed terms of 10, 15, 20, or 25 years (based on the amount borrowed).

What This Means for You

Current Borrowers:

• If no new loans are made on or after July 1, 2026, you are eligible to enroll in the current Standard, Graduated, Extended, or income based (IBR) repayment plan, or you may opt into the new RAP.
• If you are currently enrolled in ICR, PAYE, or SAVE, you must transition to a different repayment plan by July 1, 2028, (either current income based repayment plan, current standard plan, or RAP). If no selection is made, you will be moved to RAP automatically.
• It's important to note that all loans must be repaid under the same 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 plan to choose from.

New Borrowers: For loans made on or after July 1, 2026, there will be two repayment plan options - the new standard repayment plan or RAP. If no selection is made, you will be assigned to the new standard payment plan.

The One Big Beautiful Bill Act also included some changes about consolidation loans, deferment options, and forbearance that we will provide in the future as ED clarifies details. At this time, those will not be effective until July 1, 2027.

• FAFSA Asset Exemptions: Starting with the FAFSA for aid year 2026-2027, the exemptions for assets of a family farm and a family-owned small business in the SAI calculation will be reinstated. Additionally, those asset exemptions will be expanded to include family-owned commercial fisheries.
   
• Foreign Income for Pell Eligibility: Starting with the FAFSA for aid year 2026-2027, foreign income is required to be included in the Adjusted Gross Income (AGI) used to calculate Pell Grant eligibility.
   
• Full Cost of Attendance Scholarships/Grants: Effective July 1, 2026, students who receive grants or scholarships from non-federal sources covering their entire Cost of Attendance are ineligible to receive a Pell Grant, even if otherwise eligible for the program.
   
• High SAI and Pell Grant: Effective July 1, 2026, students will not be eligible to receive a Pell Grant if their SAI exceeds twice the maximum Pell Grant award which is currently $7,395.