Por Charlestien Harris, asesor financiero jubilado de Southern Bancorp
The fall semester is approaching quickly, and understanding the student loan landscape before enrolling could help you make important decisions about borrowing money for higher education. Student loans have long been one of several options for paying for college. However, with so many loan programs available, many students and families may not fully understand the process or the details before entering that space.
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, resulting in significant changes to federal student aid programs. Some of these changes took effect immediately, while others became effective later in 2025 and throughout 2026. If you have questions, below are a few of the most notable changes. For a complete list, visit https://studentaid.gov/announcements-events/big-updates.
1. Elimination and Cap of PLUS Loans
The Grad PLUS Loan Program is being phased out for new borrowers, while Parent PLUS Loans are now capped at $20,000 per year, with a lifetime limit of $65,000 per student.
Beginning July 1, 2026, new Grad PLUS Loans are no longer available to new borrowers. However, students who borrowed a Direct Loan or a Grad PLUS Loan before July 1, 2026, may continue borrowing through the Grad PLUS program for up to three additional years or until they complete their current program, whichever comes first. To qualify, they must remain enrolled in the same program at the same school where they originally borrowed the loan before July 1, 2026.
2. Stricter Aggregate Borrowing Limits
New borrowing caps have been established for graduate and professional students:
- $100,000 total for graduate degree programs
- $200,000 total for professional degree programs
- $257,500 combined lifetime borrowing limit across all federal student loan programs
Existing unsubsidized loan borrowers may continue to access unsubsidized loans under the current limits until they complete their current program or for three additional years, whichever is less.
3. New Repayment Plans
Previous income-driven repayment (IDR) plans, including SAVE, PAYE, and ICR, are being phased out. New borrowers, and borrowers who add new loans, are limited to either a Tiered Standard Plan or the new Repayment Assistance Plan (RAP).
En Tiered Standard Plan is a fixed-payment federal student loan repayment plan. Monthly payments remain the same throughout the loan term, while the length of repayment is determined by the original loan balance. Borrowers with larger balances receive longer repayment periods.
En Repayment Assistance Plan (RAP) is an income-driven repayment option that calculates monthly payments based on a borrower’s Adjusted Gross Income (AGI) and family size rather than total loan debt. If a required payment does not cover all the interest that accrues during a month, the government waives the unpaid portion, preventing the loan balance from growing. Any remaining balance is forgiven after 30 years (360 months) of qualifying payments.
These changes were introduced to simplify federal repayment options and replace programs such as SAVE (Saving on a Valuable Education), PAYE (Pay As You Earn), and ICR (Income-Contingent Repayment).
4. Pell Grant Eligibility
Students may lose eligibility for a Pell Grant if their total non-federal aid covers the full cost of attendance or if their Student Aid Index (SAI) exceeds twice the maximum Pell Grant award.
Some key changes include:
- Students become ineligible for a Pell Grant if their total non-federal grants or scholarships – such as academic scholarships, athletic scholarships, or state grants – meet or exceed their total cost of attendance.
- Applicants with a Student Aid Index (SAI) of $14,790 or higher, which is twice the maximum scheduled Pell Grant award of $7,395, are no longer eligible to receive a Pell Grant. To learn how the SAI is calculated, visit the Federal Student Aid website.
- The new asset exemption calculation excludes the net worth of family farms, family-owned businesses with 100 or fewer employees, and family-owned commercial fisheries from the SAI calculation.
- The law now includes foreign income when determining Pell Grant eligibility. This change took effect on July 1, 2026.
What These Changes Mean
These major changes to federal student loan rules took effect on July 1, 2026. In general, they limit how much students can borrow and narrow the repayment options available to future borrowers.
The overhaul, enacted through the 2025 One Big Beautiful Bill Act, will affect millions of Americans who rely on student loans to finance their education. To determine how these changes may affect your specific financial and academic situation, and to review the details of your financial aid package, visit the official Federal Student Aid website at www.studentaid.gov.
The site provides the most up-to-date information, answers to frequently asked questions, and tools that can help you explore various financial aid scenarios based on your individual circumstances.
For more information on this or other financial topics, email me at [email protected] or write to P.O. Box 1825, Clarksdale, MS 38614.
Hasta la semana que viene: ¡manténgase en forma desde el punto de vista financiero!
