2026-27 Changes to Federal Financial Aid
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, resulting in changes to federal student aid programs. Some of these changes went into effect immediately, while others will go into effect in 2026 and beyond. All information on this page is current as of May 12, 2026. Read below for more information.
Parent PLUS Loan Program
The Federal Direct Parent PLUS Loan Program remains available, but significant changes will apply. What this means:
- Parents of dependent undergraduate students may borrow up to $20,000 annually, with a lifetime (aggregate) maximum of $65,000 per student
- This replaces the previous ability to borrow up to full cost of attendance
- These limits are per student not per parent, and the combined borrowing of all parents may not exceed these amounts
- Parent PLUS will continue to require a separate application and credit check, with repayment beginning sixty (60) days after the full disbursement of the loan
- The grandfather (legacy) provision states that if a student or parent has a Federal Direct Loan disbursed before July 1, 2026, the parent may continue borrowing under the previous loan limits (up to the cost of attendance) for up to three academic years or for the remainder of the student’s expected time to complete their program, whichever comes first.
Loan Reduction Based on Enrollment Status
Beginning with the 2026-2027 aid year, federal student loan amounts will be reduced based on a students enrollment status. What this means:
- Students enrolled less than full-time in a semester and/or academic year will no longer be eligible to borrow the full annual loan limit
- The amount they may borrow will be reduced in portion to their enrollment status
- This reduction applies to: Federal Direct Loans, including Direct Subsidized and Direct Unsubsidized Loans
- University of the Ozarks considers full-time enrollment for undergraduate students to be 12 hours per semester/24 hours per year
- A student enrolled less than half-time (less than 6 hours per semester) will not be eligible for a federal direct loan
Federal Pell Grant
Beginning July 1, 2026, Federal Pell Grants will be impacted by the OB3 legislation. What this means:
- Students with a Student Aid Index (SAI) that exceeds twice the maximum Pell Grant award ($7,395) are no longer eligible for the Federal Pell Grant
- Students who receive grants or scholarships from non-federal sources covering their entire cost of attendance (COA) are ineligible to receive a Pell Grant, even if otherwise eligible for the program
- Foreign income is required to be included in the AGI used to calculate Pell Grant eligibility
Repayment
Beginning July 1, 2026, new legislation will implement major changes to student loan repayment options. What this means:
- All existing repayment plans will be discontinued for new loans first disbursed on or after July 1, 2026. The U.S. Department of Education only offer two repayment pathways:
- Tiered Standard Repayment Plan with fixed terms of 10, 15, 20 or 25 years based on borrower’s loan amount
- Repayment Assistance Plan (RAP), which provides support for eligible borrowers and continues to count toward Public Service Loan Forgiveness (PSLF) under more restrictive criteria
- New Parent PLUS borrowers will only be eligible for the Tiered Standard Repayment Plan
- New Parent PLUS borrowers will not be eligible for income-driven repayment plans or the Repayment Assistance Plan (RAP)
- Beginning July 1, 2028, borrowers currently on the SAVE, PAYE, or ICR income-driven plans—or in an administrative forbearance associated with one—will be required to transition into either the new Standard Repayment Plan or RAP; those who do not select a plan will be automatically enrolled by the Department of Education
For FAQs or additional updates on OB3, please visit: One Big Beautiful Bill Act Updates | Federal Student Aid
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