Federal Student Aid Changes: Effective 2026–27 and Beyond

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 Changed as of July 1, 2026

• The Grad PLUS Loan program is no longer available to new borrowers.
• Legacy Provision: Students who received a Grad PLUS Loan for their current program before July 1, 2026, and meet the federal requirements for the legacy provision, may continue to borrow Grad PLUS Loans for the remainder of their eligibility under the previous rules. The legacy period is generally limited to the lesser of three academic years or the student's remaining time to complete the program. Beginning with the 2029-30 Financial Aid year, no interim/legacy exception remains.

New federal borrowing limits will apply as follows:

• Undergraduate students: No changes to annual or aggregate Direct Loan limits.
• Graduate students (as classified as non-professional): Up to $20,500 per year in Direct Unsubsidized Loans, with a $100,000 aggregate limit for graduate borrowing.
• Professional students: For new borrowers on or after 7/1/26 or students who have lost their legacy eligibility, up to $50,000 per year in Direct Unsubsidized Loans, with a $200,000 aggregate limit for professional borrowing. Under current federal guidance, Puget Sound's Physical Therapy and Occupational Therapy programs are eligible for the higher professional-student limits.
• Parent PLUS: Parents may borrow up to $20,000 per year per dependent undergraduate student, with a $65,000 lifetime limit per dependent student.
• Parent PLUS Legacy Provision: Parents who meet the federal requirements for the legacy provision may continue borrowing under the previous Parent PLUS rules for the remainder of their eligibility. Beginning with the 2029-30 Financial Aid year, no interim/legacy exception remains.
• Lifetime student borrowing limit: Students are subject to a $257,500 lifetime maximum for federal student loans borrowed in the student's name. This includes undergraduate, graduate, and professional student loans, including Grad PLUS Loans. Parent PLUS Loans are not included in this limit.
   

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 for up to $50,000 per year in Direct Unsubsidized Loans. The additional loan amount is not automatically awarded and must be reviewed by Student Financial Services.

At this time, Physical Therapy and Occupational Therapy are the only Puget Sound graduate programs eligible for the higher professional-student loan limits under current federal guidance. All other Puget Sound graduate programs are subject to the standard $20,500 annual and $100,000 aggregate graduate loan limits. Federal guidance regarding which programs qualify for the professional-student limits may change.

What This Means for You

• Current Grad PLUS borrowers: If you qualify for the legacy provision, you may continue to borrow Grad PLUS Loans for the remainder of your eligible period under the previous rules.
• Current Parent PLUS borrowers: If you qualify for the legacy provision, your parent may continue to borrow under the previous Parent PLUS rules for the remainder of the eligible period.
• Prospective graduate students: Grad PLUS Loans will not be available to new borrowers beginning July 1, 2026. Graduate students will need to use Direct Unsubsidized Loans, scholarships, savings, employer assistance, or private education loans to cover remaining costs.
• Physical Therapy and Occupational Therapy students: You may be eligible to request up to $50,000 per year in Direct Unsubsidized Loans. Contact Student Financial Services if you need additional federal loan funding. Additional funding is not automatically included in your financial aid offer.
• All other graduate students: You are subject to the $20,500 annual and $100,000 aggregate graduate loan limits.
• Parent PLUS borrowers: New Parent PLUS borrowing is limited to $20,000 per year and $65,000 lifetime per dependent undergraduate student, unless the borrower qualifies for the legacy provision.
• All students: A separate $257,500 lifetime maximum applies to federal student loans borrowed in the student's name.
• Need help? Contact Student Financial Services for guidance on how these changes may affect your federal loan eligibility and 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.

Schedule of Reductions

Beginning July 1, 2026, federal rules require Direct Subsidized and Unsubsidized Loan limits to be reduced for students who are enrolled less than full time. The Schedule of Reductions (SOR) applies to both undergraduate and graduate/professional students.

The amount a student may borrow is based, in part, on their enrollment level during the academic year. This means students who plan to enroll less than full time may have a reduced annual federal loan eligibility from the start of the academic year.

A student's loan eligibility can also change if they drop or withdraw from a course during the academic year and their enrollment falls below full time. The timing of the schedule change can affect whether a previously disbursed loan is adjusted and how much loan eligibility remains for a future term.

For example: A student begins the fall semester enrolled full time and receives their federal student loan. Later, the student withdraws from a course and falls below full-time enrollment. The loan already disbursed for fall generally will not be reduced solely because of the SOR. However, the student's annual loan eligibility may be recalculated, which could result in a smaller federal loan disbursement in a future semester.

Students who return to full-time enrollment in a future semester may not automatically regain their original loan eligibility because their annual eligibility must account for their enrollment and loans received during the academic year.

Before dropping or withdrawing from a course, or if you plan to enroll less than full time, contact Student Financial Services to understand how your enrollment may affect your federal loan eligibility.

What this means for students

• Undergraduate students: SOR may reduce your federal Direct Loan eligibility if you enroll less than full time.
• Graduate and professional students: SOR may reduce your federal Direct Loan eligibility if you enroll less than full time.
• Students planning to enroll less than full time: Your loan eligibility may be reduced before your loan is disbursed.
• Students who change their schedule after receiving a loan: A schedule change may affect your remaining annual loan eligibility and future disbursements.
• Students returning to full time: Returning to full-time enrollment does not necessarily restore the original amount of federal loan eligibility for the academic year.

If you're considering a schedule change, contact Student Financial Services before making the change so we can help you understand the potential impact on your financial aid.