What the “Big Beautiful Bill” Means for Your College Future

Updated August 2026: Major federal student-aid changes under the One Big Beautiful Bill Act took effect July 1, 2026. For the 2026–27 academic year, the law changes who can use Pell Grants for short-term training, how much some parents and graduate students can borrow, and which repayment plans are available to certain federal loan borrowers.

The rules that apply to you depend on your program, when you enrolled, the types of federal loans you have, and when those loans were first disbursed. Start with the section that matches your situation below.

The One Big Beautiful Bill Act, signed into law on July 4, 2025, made significant changes to federal financial aid, student borrowing, and loan repayment. Many of those changes took effect July 1, 2026.

The new rules affect students differently depending on when they began their program, when they first borrowed federal loans, and whether they are pursuing an undergraduate, graduate, professional, or short-term workforce program. Here is what students and families need to know for the 2026–27 academic year.

Pell Grants will support job training programs

Students can now use Pell Grants for certain approved short-term workforce programs, but not every certificate or training program qualifies. Beginning July 1, 2026, students enrolled in an eligible workforce program may qualify for a Federal Pell Grant. Ask the school’s financial aid office to confirm that the exact program has received the required approval before enrolling. Do not rely only on the program’s marketing page or assume that every short-term certificate qualifies.

The maximum Federal Pell Grant award for the 2026–27 academic year is $7,395. The amount a student receives depends on factors including their Student Aid Index, family circumstances, cost of attendance, and whether they attend full-time or part-time.

The law also changed some 2026–27 FAFSA and Pell calculations:

• Students with a Student Aid Index of $14,790 or higher generally cannot receive a Pell Grant, with a limited exception for students covered by the federal Special Rule.
• Certain family-owned businesses, family farms where the family lives, and family-owned commercial fishing businesses are no longer included as FAFSA assets when they meet federal requirements.
• Students generally cannot receive a Pell Grant if their nonfederal grants and scholarships equal or exceed their full cost of attendance.

There are still undergraduate loan limits

Annual federal loan limits for undergraduate students enrolled full-time have not changed. For example, a dependent first-year undergraduate can still borrow up to $5,500 in Direct Loans, with no more than $3,500 in subsidized loans.

However, students enrolled less than full time may now qualify for a smaller annual loan amount. Colleges must reduce federal loan limits based on a student’s enrollment level. This rule also applies to students who qualify for transition exceptions to other federal loan changes.

Dependent students may be eligible for additional Direct Unsubsidized Loan funds when a parent is denied a Parent PLUS Loan because of adverse credit. However, reaching the new Parent PLUS annual or lifetime borrowing limit does not necessarily result in a denial of credit. Students and families should contact the college’s financial aid office to find out whether additional federal loan funds are available.

New borrowers have two primary repayment options

Your federal loan repayment options depend on when your loans were first disbursed and what type of loans you have. Borrowers with Direct Loans first disbursed on or after July 1, 2026, generally use either the Tiered Standard Repayment Plan or the Repayment Assistance Plan.

1. Tiered Standard Repayment Plan: Fixed monthly payments with a repayment period of 10 to 25 years, depending on the amount borrowed.
2. Repayment Assistance Plan, or RAP: Payments based on adjusted gross income and the number of dependents claimed on the borrower’s federal tax return. Monthly payments generally range from 1% to 10% of income, with a minimum payment of $10. Any remaining balance may be forgiven after 30 years.

Borrowers with older loans may have additional options, including Income-Based Repayment. Because consolidating creates a new loan and can change repayment eligibility, check the results in the Federal Student Aid Loan Simulator before consolidating.

Repayment Assistance Plan, or RAP: Monthly payments are calculated using the borrower’s adjusted gross income and number of eligible dependents, subject to a $10 minimum payment. The percentage rises as income increases. RAP also includes protections that may prevent unpaid interest from increasing the balance and may provide government principal assistance for qualifying borrowers. Any remaining eligible balance may be canceled after 30 years of qualifying payments.

PAYE and ICR are scheduled to end by July 1, 2028. The SAVE Plan was invalidated following court action effective March 10, 2026. Borrowers in an older repayment plan should check their StudentAid.gov account or contact their loan servicer before switching plans.

New Parent PLUS Loan limits are now in effect

For academic years beginning on or after July 1, 2026, parents who do not qualify for the transition exception may borrow a combined maximum of:

• $20,000 per academic year for each dependent student
• $65,000 total over that student’s undergraduate education

The $20,000 limit is shared across all parents borrowing for the same student. The $65,000 lifetime limit does not reset when loans are repaid, forgiven, or discharged. A college may also set a lower Parent PLUS limit for a particular program, as long as it applies the policy consistently. 

Some families qualify for a temporary exception to the new limits. Generally, the student must have:

• Been enrolled in the program at the institution as of June 30, 2026
• Received a Direct Loan for that program before July 1, 2026, or had a parent receive a Parent PLUS Loan on their behalf
• Remained continuously enrolled in the same program at the same institution

Some families can temporarily continue borrowing under the previous Parent PLUS rules. The exception generally applies when the student was enrolled in the same program at the same institution on June 30, 2026, and either the student or a parent had already received a Direct Loan for that program before July 1, 2026. Eligibility generally continues for the shorter of three academic years or the student’s remaining expected program length. Students and parents should ask the college’s financial aid office whether the exception applies to them. 

Federal Parent PLUS Loans first disbursed between July 1, 2026, and June 30, 2027, have a fixed interest rate of 9.07%. That rate is fixed for the life of the loan.

What to do if the Parent PLUS limit leaves a balance

If faced with a balance, families should:

1. Check that all grants, scholarships, deposits, and accepted loans appear correctly on the college bill.
2. Contact the financial aid office about missing aid, a financial-aid appeal, or the Parent PLUS transition exception.
3. Contact the student accounts or bursar’s office about tuition payment plans.
4. Ask about institutional emergency grants or additional scholarships.
5. Carefully compare the total cost of private loans, including whether the rate is fixed or variable and whether the loan offers federal-style repayment protections.

Grad PLUS Loans ended for most new borrowers

Most graduate and professional students beginning a new program or borrowing for the first time on or after July 1, 2026, can no longer receive Grad PLUS Loans. Students who meet the federal transition exception may temporarily remain eligible while completing the same program.

Eligible graduate students may generally borrow up to $20,500 per year in Direct Unsubsidized Loans, with a $100,000 graduate aggregate limit. Eligible professional students may generally borrow up to $50,000 per year, with a $200,000 professional aggregate limit.

Certain students who were enrolled and had already received a Direct Loan for the same program before July 1, 2026, may temporarily continue using the previous Grad PLUS rules.

What students and families should do now

• Complete the FAFSA every year, even if you are unsure whether you will qualify for aid.
• Review your 2026–27 financial-aid offer and college bill carefully.
• Ask the financial aid office whether the Parent PLUS or Grad PLUS transition exception applies to you.
• Confirm that your program is officially approved before counting on Workforce Pell.
• Ask about payment plans or an aid appeal before turning to private loans.
• Compare colleges using net price, not just published tuition.
• Apply for scholarships throughout college, not only during senior year.
• Check Federal Student Aid for current rules before making a borrowing or repayment decision.

Use Appily to compare schools based on fit and cost

New federal loan limits make it more important than ever to understand what your family would actually pay at each college. Use Appily’s college list maker to find schools that fit your goals, then compare each college’s net price, financial aid, scholarships, and remaining cost before deciding where to enroll.