Federal Student Aid Changes with the One Big Beautiful Bill Act (OBBBA)
Federal Student Aid is changing significantly for students and parents beginning with the 2026–27 aid year due to the passage of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025. These changes impact Federal Pell Grant eligibility, how much federal loans students and parents can borrow, how federal loans are adjusted based on enrollment, and eligibility for certain federal loan programs.
fafsa processing delays for 2026-27
A federal system update on April 26th is changing how FAFSA records are processed. As a result, students who have not filed their FAFSA by that date may experience a significant delay in receiving their 2026-27 aid offer. File your 2026-27 FAFSA now at studentaid.gov.
Effective date
All changes below apply to Federal Pell Grant eligibility for the 2026-27 academic year and to federal student loans first disbursed on or after July 1, 2026 in the 2026–27 academic year and beyond.
please note
Final implementation details are pending federal regulations from the U.S. Department of Education. Information on this page may be updated as additional guidance becomes available.
One of the most important changes under OBBBA is the requirement that federal loan eligibility must be prorated based on a student’s enrollment status:
– Students enrolled less than full-time (12 undergraduate credits/6 graduate credits) will have their annual loan limits reduced proportionally based on the percentage of full-time enrollment.
– For example, a student enrolled half-time (6 undergraduate credits/3 graduate credits) is only eligible for 50% of the annual loan limit they would receive at full-time status.
This change affects both undergraduate and graduate borrowers and replaces prior practice where less than full-time enrollment might not have reduced loan eligibility the same way.
Undergraduates will still have access to Federal Direct Subsidized and Unsubsidized Loans.
What stays the same:
– Annual and aggregate loan limits remain the same (although undergraduate loans will count towards the new lifetime limits).
What’s new:
– Annual loan amounts are adjusted down if enrolled less than full-time
– Other loan types like the Federal Parent PLUS Loan now have new caps (see below)
OBBBA has major changes for graduate and professional student borrowing:
Graduate Students (Non-professional programs)
– Graduate PLUS Loans will no longer be available for new borrowers as of July 1, 2026*.
– Graduate students will be limited to Direct Unsubsidized Loans with:
Annual limit: $20,500
Aggregate limit: $100,000
– Loan amounts are prorated for less than full-time enrollment (6 graduate credits).
* Legacy Provision:
A student can continue to borrow from the Graduate PLUS Loan program if:
1. The student has a Federal Direct Loan disbursed before July 1, 2026, while enrolled in a credentialed program of study, AND
2. The student is enrolled in the same credentialed program.
Under these conditions, the student may continue to borrow from the Graduate PLUS Loan for 3 academic years or until the end of the program of study, whichever comes first.
Federal Parent PLUS loans will now be capped at:
$20,000* per year per dependent student
$65,000** lifetime per dependent student
These caps are new, replacing the prior ability to borrow up to the full cost of attendance without a lifetime limit.
* Limits apply to all parents of a student, regardless of whether one or more parents are borrowing on a student’s behalf
** Legacy Provision:
A parent can continue to borrow funds from the Parent PLUS Loan program exceeding these limits if:
1. The student has a Federal Direct Loan disbursed before July 1, 2026, while the dependent student was enrolled in a credentialed program of study, AND
2. The student is enrolled in the same credentialed program.
Under these conditions, a parent may continue to borrow from the Parent PLUS Loan for 3 academic years or until their dependent student reaches the end of their program of study, whichever comes first
All Federal student loan borrowing (excluding Federal Parent PLUS loans) will be subject to a combined lifetime cap of approximately $257,500 across all loan types — a first under federal law.
Students will no longer be eligible for a Pell Grant if their Student Aid Index (SAI) is greater than twice the maximum Pell award for that year. For the 2026-2027 academic year, the maximum Pell award is $7,395, therefore an applicant with an SAI equal to or greater than $14,790 for the award year are ineligible for a Pell Grant.
Students who receive grants or scholarships from non-federal sources covering their entire COA are ineligible to receive a Pell Grant, even if otherwise eligible for the program.
Want to learn more about loan options?
Advisor, Faculty, and Staff Resources
Information Sessions for Advisors, Faculty, and Staff
Drop-in sessions for Spring 2026 have concluded. To request a training or Q&A for your department, office, or team, please email um.sfs@maine.edu
Key policy changes to know
Four significant provisions take effect July 1, 2026 and will affect how students borrow for the 2026–27 academic year and beyond.
Graduate PLUS loans eliminated: Graduate students will no longer have access to Graduate PLUS loans.
Parent PLUS loan caps: Parent PLUS loans will be subject to new annual and lifetime borrowing limits.
Loan proration Students enrolled less than full-time (12 credits for undergraduates/6 credits for graduate students) will have loan eligibility prorated based on number of credits of enrollment.
Lifetime limits New aggregate loan borrowing limits may impact those who have already borrowed.
Talking points by audience
Undergraduate students
- Direct loan limits for undergrads are not changing under OBBBA
- Parent PLUS loan changes may affect family borrowing ability; encourage early conversations at home
- If a family’s Parent PLUS loan eligibility is limited, SFS can discuss alternative financing options, including alternative (private) loans and payment plans
- Enrollment level matters: less than full-time impacts loan amounts for all federal loan borrowers
- Encourage students to check their current aid package in MaineStreet
Graduate students
- Graduate PLUS loans will not be available for 2026–27 and beyond
- Unsubsidized loan eligibility remains
- Students with high prior undergraduate debt may hit new lifetime limits sooner
- SFS can discuss additional financing options, including alternative (private) loans and payment plans
Families & Parents
- Parent PLUS loan annual and lifetime caps will apply starting July 1, 2026
- Families currently borrowing up to full COA may need to explore other options moving forward
- SFS can discuss additional financing options, including alternative (private) loans and payment plans
- Refer all borrowing strategy questions directly to SFS
When to refer to SFS
If a student has specific questions about their aid package, loan eligibility, or how OBBBA affects their individual situation, please refer them to SFS. We’re available by appointment, walk-in, or phone at 207-581-1324. Students can also reach us at um.sfs@maine.edu.
fAQ
What is the One Big Beautiful Bill Act and why does it matter?
The One Big Beautiful Bill Act (OBBBA), Public Law 119-21, makes significant changes to the federal student loan program, effective July 1, 2026 (the 2026-27 Academic Year). For many students, it means reduced access to federal loans compared to prior years, particularly for graduate students and families borrowing Parent PLUS loans.
Do these changes affect students who are already enrolled, or only new students?
The changes apply to all students, continuing and incoming, for the 2026–27 academic year and beyond. Prior loans are not affected.
Some provisions include legacy protections for borrowers who have already begun borrowing in certain loan types. Students with complex borrowing histories should speak directly with SFS to understand their individual situation.
Note for advisors: If a student asks whether their previous current loans are affected: no. The changes apply to new borrowing beginning with 2026–27.
A graduate student is asking about what replaces Graduate PLUS loans. What should I tell them?
Graduate PLUS loans are eliminated starting July 1, 2026. Graduate students will still have access to unsubsidized federal direct loans. For many students, this will result in needing to identify other financing options.
Students needing additional resources should explore: graduate assistantships and fellowships, payment plans, and alternative (private) educational loans. SFS can help students understand their specific situation and all available options.
Note for advisors: Refer graduate students with specific financing questions to SFS. Avoid advising on alternative loan products directly.
Are graduate students at risk of hitting a lifetime borrowing limit?
Yes, OBBBA establishes new lifetime aggregate limits for graduate borrowers. Students who have previous undergraduate and/or graduate borrowing may find they have less eligibility remaining for graduate borrowing than expected.
How does loan proration work, and which students does it affect?
Loan proration (also called Schedule of Reduction) reduces a student’s loan eligibility in proportion to their total enrolled credits by semester. Students enrolled less than full-time (12 credits for undergraduates/6 credits for graduate students) will receive a reduced loan amount rather than the full annual limit.
This will most commonly affect part-time undergraduate and graduate students, including students in their final semester or year who need fewer than a full year’s worth of credits to graduate.
Note for advisors: If a student is worried about their loan eligibility, refer them to SFS. Proration calculations require enrollment data that SFS can assess accurately.
A family is asking about Parent PLUS. What are the new limits?
OBBBA introduces annual and lifetime caps on Parent PLUS loan borrowing. Previously, parents could borrow up to the full cost of attendance minus other aid each year, with no lifetime cap. Under the new rules, parents can borrow up to $20,000 per year (per student), and up to $65,000 lifetime (per student).
Families who have historically borrowed the maximum amount through Parent PLUS loans each year may need to explore other financing options. SFS can work with families to identify options, including payment plans and other available loan options.
Does OBBBA change anything for undergraduates borrowing in their own name?
Annual direct subsidized and unsubsidized loan limits are not changing for undergraduate students.
However, proration rules will apply to undergraduate students enrolled less than full-time (12 credits).
A student’s family says their Parent PLUS loan was denied. What should I do?
Denial for a Parent PLUS loan (due to credit requirements) triggers the ability for the student to borrow additional unsubsidized direct loan funds.
Please refer the student to SFS. We can confirm additional unsubsidized eligibility and discuss alternative funding.
What if a student is upset or anxious about these changes?
Validate: It’s natural for students to feel anxious when federal aid policy changes.
Reassure: SFS is actively working on targeted messaging with impacted students, so that they can begin planning their financing options before the fall semester starts.
Redirect: Encourage them to make an appointment with SFS rather than trying to figure out the specifics on their own or through social media. Individual situations vary significantly.
Where can I learn more so I’m prepared for advising conversations?
Request a training session from SFS for your department/office.
Email SFS at um.sfs@maine.edu with specific questions before advising appointments.
You don’t need to be a financial aid expert to help your students! SFS is here to support you and students.
When does loan proration happen if a student drops after add-drop?
Not yet determined. The DOE has not specified whether adjustments happen mid-semester or in a subsequent term. The team is still evaluating options to minimize student impact.
How will mass proration be administered?
Formula-driven: actual credits as a percentage of a 24-credit academic-year standard. Roughly 4,000 students per term are already adjusted; OBBBA expands scope. No proration grandfathering for existing students.
Does proration apply even if a student drops but keeps paying?
Yes. Proration is based on NSLDS-reported enrollment, not payment status. Timing logistics are still being worked out.
Does fall or spring disbursement get adjusted after a mid-year drop?
More information to come.
What are the two approaches being considered for post-add-drop loan adjustments?
Option 1: Adjust in fall at time of drop (creates a fall bill). Option 2: Reduce spring eligibility to offset the difference. Institutional leadership will decide after weighing impacts.
Do L grades and F grades affect loans differently?
Yes. F and I grades are treated as earned — no proration trigger. L grades (never attended) reduce enrollment count and may trigger a loan reduction. Faculty need to understand and consistently apply this distinction.
Is the L grade going away?
No. It is being retained, but consistent application is being emphasized. L should only be used for students who never attended, not as an alternative to F for students who attended and failed.
Which grades trigger loan proration adjustments?
Only W (withdrawal) and L (never attended) grades trigger required loan adjustments. F and I grades are treated as earned and do not require proration.
What does legacy status protect, and who qualifies?
Legacy protects against Grad PLUS elimination and new Parent PLUS caps, but not from proration. Graduate students qualify by having borrowed before July 1, 2026, at the same institution in the same program. Undergrads lose it only by changing credential levels.
What triggers loss of legacy status for a grad student?
Changing major or program. Minor changes do not affect legacy. Once lost, it cannot be regained.
Do study abroad students lose legacy status?
No. They remain enrolled at UMaine and retain legacy status throughout study abroad.
What if a grad program has no published length in MaineStreet?
Legacy eligibility can’t be determined without it. The FA team is coordinating with Student Records to ensure all programs are properly coded.
Are legacy students exempt from proration?
No. Proration applies to all students regardless of legacy status. Legacy only protects access to Grad PLUS loans and the old Parent PLUS limits.
What replaces Grad PLUS for new graduate borrowers?
There is no replacement for Graduate PLUS Loans. New borrowers will only be able to borrow Federal Direct Unsubsidized Direct loans (subject to proration and the new $100K graduate lifetime cap). Graduate PLUS is entirely eliminated for new non-legacy borrowers. New graduate students may also explore alternative (private) loan options.
When does Grad PLUS elimination take effect?
July 1, 2026. Students who borrowed Grad PLUS prior to that date and meet legacy criteria may continue to access it.
Are doctoral candidacy students exempt from proration?
Partially. They are exempt from the half-time enrollment requirement for loan eligibility and can receive loans at less than half-time. However, Grad PLUS elimination still applies to new non-legacy candidacy students.
How does the $20K Parent PLUS cap affect high-COA families?
Out-of-state families will face a $20K annual cap and a $65K lifetime cap that could be exhausted before graduation.
What options exist for families who hit the Parent PLUS cap?
Private/alternative loans and the university’s restricted institutional loan program (still being developed). Elm Select is a resource for comparing private loan products.
Is Parent PLUS subject to proration?
No. Proration applies only to student-borrowed loans (subsidized, unsubsidized, Grad PLUS). Parent PLUS is subject only to the new $20K annual and $65K lifetime caps.
What is causing the FAFSA processing pause and how long is it?
The Department of Education (ED) is changing the FAFSA file layout, requiring a vendor patch from Oracle/MaineStreet. Pause runs April 26 through at least mid-May. No new FAFSA imports or verification updates are possible during this period.
How are incoming students getting aid offers during the FAFSA pause?
Manual process: SFS staff are creating estimated award packages using federal data for new filers, bypassing MaineStreet, to meet the May 1 enrollment decision deadline.
Who is affected by the April 26 FAFSA processing pause?
Two groups: new filers after April 26 (records can’t be loaded), and continuing students with outstanding verification or pending corrections. Students with complete, verified FAFSAs already on file are unaffected.
Do repaid loans count toward the new lifetime cap?
Yes. Under OBBBA, both outstanding and previously repaid or discharged loans count toward the $257,500 combined lifetime cap. Students should review their full borrowing history on studentaid.gov.
What should grad students near the $100K limit do?
Review their full loan history on studentaid.gov and consult SFS. Legacy status evaluation may be relevant for those who qualify.
What is the 50% fall semester loan cap?
Students cannot receive more than 50% of their annual loan eligibility in the fall. Spring can potentially exceed 50% if enrollment supports it. This affects how proration calculations interact across the academic year.
What is the advisor’s role under OBBBA?
Advise, don’t calculate. The key message to students: contact SFS before making any enrollment or program changes. Advisors should not try to determine aid eligibility themselves.
Will a warning be added to the add/drop form?
More information to come.
What is the one takeaway for non-FA staff?
Always direct students to SFS before any enrollment-level or program decision. You don’t need to be the expert — just be the bridge.
Where should advisors go for ongoing OBBBA updates and resources?
This webpage (umaine.edu/sfs/obbba) is updated as new information becomes available. Dedicated training sessions are available on request; reach out to um.sfs@maine.edu.
Do R2T4 returns from medical withdrawals count against lifetime limits?
No. School returns do not count. But if the student directly repays the loan, those repaid amounts count toward the new lifetime caps.
Will there be dedicated medical withdrawal training under OBBBA?
Yes; more information to come
What happens to financial aid when a student withdraws?
Depends on timing. During add-drop: no academic impact, full tuition refund, aid adjusted. After add-drop: W grade recorded, loans may be adjusted, but Pell and merit aid are generally not reduced for students who were full-time at disbursement.
Are private loans subject to proration?
No. Private/alternative loans are not subject to OBBBA proration rules. However, increased demand for private loans is anticipated. Elm Select is a resource for comparing products.
What is the long-term impact on graduate/professional program enrollment?
A significant concern. Reduced federal borrowing capacity may push graduate and professional students toward private loans, with potential effects on enrollment — especially in high-cost programs like medicine.