Federal Aid Updates: One Big Beautiful Bill Act

The Federal Parent PLUS Loan program will have new borrowing limits: 

• Starting July 1, 2026, first-time Parent PLUS Loan borrowers will have a loan borrowing cap of $20,000 per student, per academic year. There will also be a new lifetime borrowing limit of $65,000 per dependent student. 
• Parents who borrowed a Parent PLUS Loan for their Holy Cross student before July 1, 2026, may be permitted to continue borrowing under the current rules for up to three years or until the student completes their current academic program, whichever comes first.

We understand that some students may need funding beyond Parent PLUS loan limits to cover educational expenses. Many private lenders offer alternative loan options that can finance up to the full cost of attendance, often without annual or lifetime borrowing caps. Please visit here for additional information.

The Federal Direct Loan program for undergraduate students remains unchanged under this legislation. However, undergraduate Direct Loans will count toward new federal lifetime borrowing limits.

The One Big Beautiful Bill provides two years of funding for the Pell Grant program and addresses the projected Pell funding shortfall. The law also includes changes to Pell Grant eligibility that are expected to take effect on July 1, 2026.

• Students will not be eligible for a Pell Grant if their full cost of attendance is met or exceeded through scholarships, grants, and/or tuition waivers.

The Public Service Loan Forgiveness (PSLF) program is not changed by this legislation. However, separate regulatory proposals have been introduced that could affect future eligibility requirements.

Changes to the Federal student loan repayment options will begin July 1, 2026. Under the new law, current income-driven repayment plans will be replaced by two new options: the Standard Repayment Plan and the Repayment Assistance Plan (RAP).

• Borrowers who took out federal student loans before July 1, 2026, and who borrow a new loan on or after that date will be limited to the new Standard Repayment Plan or RAP for those newer loans.
• Borrowers currently enrolled in existing income-driven repayment plans—such as ICR, PAYE, or SAVE—may continue using those plans until July 1, 2028.

After July 1, 2028, borrowers who remain in one of those current plans and do not make a new repayment selection are expected to be transitioned to the Repayment Assistance Plan (RAP).

In most cases, no. However, it may depend on when your first federal Direct Loan is disbursed.

• If your first Direct Loan disbursement for the 2025–26 academic year occurs on or before June 30, 2026, there are no changes to federal student loans or other financial aid programs for that year. Standard eligibility rules, borrowing limits, and Parent PLUS/Graduate PLUS Loan access will remain in place.
• If your first Direct Loan disbursement occurs on or after July 1, 2026, the new OB3 provisions will apply. This may affect borrowing limits and other federal loan-related provisions. Students whose first Direct Loan is disbursed on or after this date may also lose eligibility for Graduate PLUS Loans.

Students who begin attendance in Summer 2026 and later withdraw, stop attending, or do not successfully complete a Summer 2026 course may also be affected by the new loan provisions that take effect on July 1, 2026.

Loans first disbursed on or after July 1, 2026, will be eligible only for the Standard Repayment Plan or the Repayment Assistance Plan (RAP). Loans disbursed before that date may remain eligible for existing repayment options, depending on the repayment plan.

Parents with a Federal Direct PLUS Loan after July 1, 2026, will have both a maximum annual loan amount per student, per academic year, and the aggregate loan limit per student.

If you are considering a two- or three-year master’s program, a professional degree, or a program with extended clinical, internship, or research requirements, it is important to plan ahead. Starting July 1, 2026, Graduate PLUS Loans will no longer be abailable for new borrowers. Students who begin a new graduate or professional program after this date will have their loan eligibility determined under the new rules, including eligibility for the Direct Federal Unsubsidized Loan, which is subject to annual and aggregate borrowing limits.