Policy Updates

What changed in 2026.

The One Big Beautiful Bill Act brought the biggest financial aid changes in years. Here's what it all means — in plain English.

The headlines

  • Grad PLUS loans eliminated for new borrowers
  • New annual and aggregate loan caps for graduate & professional students
  • Part-time students' loans prorated to enrollment percentage
  • Pell Grant eligibility capped at SAI of $14,790
  • Family businesses, farms, and fishing operations excluded from assets
  • Foreign income now included in Pell Grant calculations
  • Real-time identity verification at FSA ID creation
  • Parent PLUS loans eliminated for new borrowers (with legacy exceptions)
Legislation·July 4, 2025Major change

The One Big Beautiful Bill Act — what it means for your FAFSA

The OBBBA (signed by President Trump on July 4, 2025) is the biggest set of federal student aid changes in years. It affects Pell Grant eligibility, loan limits, asset calculations, and more — all effective for the 2026-27 academic year starting July 1, 2026.

Key details

  • Eliminates Grad PLUS loans for new borrowers starting July 1, 2026
  • Caps graduate student loans at $20,500/year and $100,000 aggregate
  • Caps professional student loans at $50,000/year and $200,000 aggregate
  • Prorates loan amounts for part-time enrollment
  • Changes Pell Grant eligibility formula with new SAI cap
  • Excludes small family businesses, family farms, and fishing operations from assets
  • Requires inclusion of foreign income in AGI for Pell calculations
Pell Grants·October 1, 2025Major change

New Pell Grant eligibility cap — SAI matters more than ever

For the first time, there's a hard Student Aid Index (SAI) cutoff for Pell Grant eligibility. If your SAI is $14,790 or higher, you will NOT qualify for a Pell Grant — regardless of other factors. Additionally, students who already receive grants and scholarships covering their full cost of attendance won't be eligible for Pell.

Key details

  • SAI cap of $14,790 for Pell eligibility (new hard cutoff)
  • Students with non-federal grants/scholarships covering full COA are ineligible
  • Foreign income must now be included in AGI calculation
  • These changes may reduce Pell eligibility for some middle-income families
Graduate Students·Effective July 1, 2026Major change

Grad PLUS loans eliminated — what graduate students need to know

The biggest change for graduate students: Grad PLUS loans are being eliminated for new borrowers. If you're starting a graduate program in or after Fall 2026 and haven't borrowed Grad PLUS before, you won't have access to this loan type. New annual and aggregate caps also apply to Direct Unsubsidized Loans for grad students.

Key details

  • Grad PLUS loans unavailable for new borrowers after July 1, 2026
  • Legacy exception: if you had a Grad PLUS loan before July 1, 2026 while enrolled, you can keep borrowing for up to 3 more years
  • Graduate annual loan limit: $20,500 (previously uncapped with PLUS)
  • Graduate aggregate limit: $100,000 (excluding undergrad borrowing)
  • Professional students: $50,000/year, $200,000 aggregate
  • Private loans will likely fill the gap — compare rates carefully
Loan Limits·Effective July 1, 2026Notable change

New loan limits and proration for part-time students

Federal loan amounts are now prorated based on enrollment intensity. If you're enrolled less than full-time, your loan eligibility will be reduced proportionally. A student enrolled at 50% will receive 50% of the full-time loan amount. This is a significant change for part-time students who previously received full loan amounts.

Key details

  • Loans prorated to match enrollment percentage
  • Example: half-time student gets half the annual loan limit
  • Applies to all new borrowing starting July 1, 2026
  • Legacy provision available for students with pre-existing loans
  • Parent PLUS loans also eliminated for new borrowers with legacy exceptions
Asset & Income·Effective 2026-27Improvement

Good news for family businesses, farms, and fishing operations

The OBBBA excludes three types of assets from the FAFSA calculation: family-owned businesses with 100 or fewer employees, farms where the family resides, and commercial fishing businesses. If any of these apply to you, your SAI could decrease significantly — meaning more aid eligibility.

Key details

  • Family businesses with ≤100 full-time employees excluded from net worth
  • Family farms (where the family lives) excluded from net worth
  • Commercial fishing businesses and related expenses excluded
  • Foreign income must now be included in AGI (could increase SAI for some families)
  • These exclusions previously existed before the FAFSA Simplification Act removed them — now they're back
Process Improvements·August 2025Improvement

Real-time identity verification and faster processing

The 2026-27 FAFSA includes significant technical improvements. Identity verification (SSN matching) now happens in real-time when you create your FSA ID — no more waiting 1-3 days. The contributor invite process has been simplified to reduce the #1 dropout point in FAFSA completion.

Key details

  • Real-time SSN verification at account creation (no more 1-3 day wait)
  • Simplified contributor invite process
  • Improvements applied to 2024-25, 2025-26, AND 2026-27 cycles
  • Increased fraud prevention with more V4 verifications for first-time applicants
  • Beta testing occurred August-September 2025 with real form submissions
Timeline·October 1, 2025Improvement

The 2026-27 FAFSA launched on time — here's the timeline

After back-to-back delayed launches, the 2026-27 FAFSA opened on October 1, 2025 as required by the bipartisan FAFSA Deadline Act. Beta testing began in August with select school districts, followed by broader individual access in September. By December 26, over 1.3 million high school seniors had completed the form — a 9.8% increase over the same point for the class of 2023.

Key details

  • FAFSA opened October 1, 2025 (on the traditional date)
  • Beta testing: August (in-person events), September (individual access)
  • 1.3 million+ high school seniors completed by December 26, 2025
  • 9.8% increase in completions compared to class of 2023 at same point
  • Top completion states: Illinois (46.6%), Tennessee (42.4%), New Jersey (42.2%)
Loan Repayment·Effective July 1, 2026Notable change

SAVE plan and income-driven repayment changes

The OBBBA makes significant changes to income-driven repayment plans. New borrowers after July 1, 2026 will have access to a modified repayment structure. The SAVE plan (which was already blocked by court orders) and other IDR plans are being restructured. If you're a current borrower, check studentaid.gov for the latest on how your repayment options are affected.

Key details

  • IDR plans being restructured under the OBBBA
  • Changes affect new borrowers starting July 1, 2026
  • Current borrowers may be grandfathered under existing terms
  • Check studentaid.gov for the most current repayment information
  • Contact your loan servicer for personalized guidance