Federal Student Aid Changes- Frequently Asked Questions (FAQ)

No. Undergraduate student loans remain the same. You can still borrow as you do now. Earlier ideas to remove interest subsidies while you’re in school did not make it into the law.

Starting July 1, 2026, parents will only be able to borrow up to:

• $20,000 per year, per child
• $65,000 total, per child

• The law adds $10.5 billion to keep Pell funded for the next two years.
• FAFSA will now better account for family farms, small businesses, and foreign income.
• A new Workforce Pell Grant will be available for short-term job-training programs.
• Students with full-ride scholarships that already cover their full cost of attendance will no longer get Pell Grants.
• Students with a Student Aid Index (SAI) more than twice the maximum Pell award ($14,790 for 2025) will not qualify.

If your scholarship covers your full cost of attendance (such as tuition, fees, housing, etc.), you won’t receive Pell Grant for that year. This will mostly affect athletes and a small group of other students.

Big changes are coming:

• Graduate PLUS Loans will end on July 1, 2026.
• Graduate students will instead use Unsubsidized Stafford Loans, but with new limits.
• Lifetime limit across all loans: $257,500.

New caps for graduate students:

• Non-professional degrees: $20,500 per year / $100,000 total.
• Professional degrees (such as law, medicine, dentistry, pharmacy, etc.): $50,000 per year / $200,000 total.

Professional degrees prepare you to work in fields that require a license (law, medicine, dentistry, pharmacy, etc.). The Department of Education will give more guidance, but if your program leads directly to a licensed profession, it may be included.

If you receive a Graduate PLUS Loan before June 30, 2026, you may keep using it for up to three more years or until you finish your program (whichever comes first). After that, no more Graduate PLUS loans will be available.

Yes. Loan amounts will now be tied to how many classes you take. For example, if you’re enrolled at 75% of full-time, you’ll only be able to borrow 75% of the loan limit.

It’s a new rule that checks if your program actually helps students earn enough after graduation. The government will compare the typical earnings of program graduates to earnings of high school or bachelor’s grads in your state.

• If your program’s earnings are lower, the program may fail.
• If a program fails two out of three years, it loses access to federal student loans.

This does not affect Pell Grants.

Yes, but mostly good news:

• You can still get tax benefits like the American Opportunity Tax Credit and Lifetime Learning Credit.
• Employers can keep helping you with student loan payments (up to $5,250 a year). That amount will increase with inflation starting in 2027.

Starting July 1, 2026, repayment will look different:

Standard Plan (for new borrowers after July 1, 2026):

• Owe less than $25,000 → repay in 10 years.
• Owe $25,000–$49,999 → repay in 15 years.
• Owe $50,000–$99,999 → repay in 20 years.
• Owe $100,000+ → repay in 25 years.

New Income-Driven Repayment (IDR) Plan:

• Payments are a percentage of your income (1%–10% depending on income level).
• Forgiveness after 360 payments (30 years).
• Interest above your monthly payment may be waived if you’re a “distressed borrower” (definition still pending).
• If you have dependents, your payment may be lowered slightly.
• Minimum payment is $10/month.

For current borrowers (loans before July 1, 2026):

Starting July, 1, 2028, you'll move into one of the two existing IBR plans:

• Borrowed before July 1, 2014 → 15% of discretionary income, forgiveness after 25 years.
• Borrowed after July 1, 2014 → 10% of discretionary income, forgiveness after 20 years.

The rules for Borrower Defense and Closed School Discharge (which can cancel loans) are delayed until July 1, 2035. Until then, the older rules remain in effect.