Federal Student Loans Landscape Changes
Last year, the One Big Beautiful Bill Act, which included many changes to federal financial aid, was signed into law. The Department of Education finalized the provisions in the law and they will be effective July 1, 2026.
This information is intended to orient students to the changing landscape of federal student loan programs. The final rules were published by the Department of Education. We will update this page with updates as we have them.
For additional details or questions specific to graduate programs, please contact the corresponding financial aid office. Undergraduates can connect with Financial Assistance.
What are the major changes introduced by the Act?
- Graduate PLUS loans eliminated for new borrowers. Current borrowers can continue for up to three years or the remainder of their program (whichever is less). They must stay in the same program to remain eligible. Students who take a leave of absence or withdraw on/after July 1, 2026 lose legacy borrowing protections.
- Caps on federal borrowing. Graduate students: up to $20,500 per year, $100,000 aggregate. Professional students: up to $50,000 per year, $200,000 aggregate (with certain programs proposed to be classified as “professional”).
- Parent PLUS loans capped. Parents will be limited to $20,000 per year per child and $65,000 lifetime per child (instead of cost of attendance), with grandfathering for families who previously borrowed.
- Total Lifetime Loan Limit:There is a new total lifetime limit across all direct loans (whether undergraduate or graduate loans) of $257,500, including Graduate PLUS loans and Parent PLUS loans borrowed on a student’s behalf.
- Loan Proration: Under the new rules, the Department of Education will prorate loans (i.e., reduce the maximum loan limit) for any students enrolled in less-than-full time status.
- Repayment Plans: The law created a new standard repayment plan and a new income-based repayment plan (RAP). Some existing student loan repayment plans will be eliminated on July 1, 2028. For more information, please visit studentaid.gov.
- Professional Student Definition: The Department of Education has defined a subset of graduate programs as “professional,” and five programs at Boston University would meet this definition: Dentistry (DMD), Law (JD), Medicine (MD), Theology (MDiv) and Clinical Psychology (PhD).
When do these changes take effect?
Most changes will take effect starting July 1, 2026, and will be in place for the 2026–27 academic year. These changes apply to all students starting at BU in Fall 26, regardless of when you apply for federal loans for the 2026-27 academic year.
UNDERGRADUATE STUDENT AID
How will these changes affect undergraduate student aid?
- Loan Limits: While the new law does not change the annual or aggregate loan limits for undergraduate students, undergraduate loans will now count towards the new lifetime limit of $257,500.
- Pell Grants: Students receiving scholarships or grants that meet or exceed their full cost of attendance will no longer be eligible for Pell Grants.
What’s happening with Parent PLUS loans?
Parents will be permitted to borrow up to $20,000 per year per child and $65,000 lifetime per child. This is a change from current law, which allows parents to borrow up to the full cost of attendance per child. Borrowers who previously borrowed a Direct Loan and or their parent borrowed a Parent PLUS Loan for the same program may be eligible to continue borrowing under current limits for up to three academic years or the remainder of their program, whichever is less.
We recognize that students may require additional support beyond the Parent PLUS loan limits to finance the cost of their education. Many private lenders offer specialized financing options, covering up to the full cost of education without annual loan limits or aggregate borrowing limits.
Boston University provides information about credible.com, a free online loan selection tool that allows students to compare pre-qualified rates, terms, eligibility rules side-by-side, to help students find the private loan that best meets their needs.
GRADUATE STUDENT AID
What’s happening with graduate loans?
Effective, July 1, 2026, Graduate PLUS loans will no longer be available for new borrowers. Previously, this program allowed students to borrow up to the cost of attendance. Existing borrowers are still eligible for Grad PLUS loans for the remainder of their program or up to three years, whichever is less. Any students who are on a leave of absence greater than 180 days or withdraw from their program on or after July 1, 2026, will lose any legacy borrowing protections, even if they return to the same program during the three-year window. Legacy borrowers will not be able to extend these terms beyond Spring 2029.
What are the new federal graduate borrowing limits?
Graduate students may be eligible for up to $20,500 per year in direct unsubsidizedAn Unsubsidized Federal Direct Student Loan is made to a borrower meeting specific eligibility requirements, but not based on financial need (FAFSA). The borrower is responsible for paying all interest that accrues throughout the life of an unsubsidized loan. During in-school status, deferment, and forbearance periods, the borrower may choose to pay the interest charged on the loan or allow the interest to be capitalized. loans, with an aggregate limit of $100,000. Professional students (as defined by the Department of Education) may be eligible for up to $50,000 per year in direct unsubsidizedAn Unsubsidized Federal Direct Student Loan is made to a borrower meeting specific eligibility requirements, but not based on financial need (FAFSA). The borrower is responsible for paying all interest that accrues throughout the life of an unsubsidized loan. During in-school status, deferment, and forbearance periods, the borrower may choose to pay the interest charged on the loan or allow the interest to be capitalized. loans, with an aggregate limit of $200,000.*
If you borrowed before July 1, 2026, you remain eligible for the previous loan limits for the same program.
*The Department of Education has defined a subset of graduate programs as “professional,” and five programs at Boston University would meet this definition: Dentistry (DMD), Law (JD), Medicine (MD), Theology (MDiv) and Clinical Psychology (PhD).
What options are available for incoming graduate students?
US citizens or permanent residents who are enrolled in at least six credits may apply for an unsubsidized Direct loan for their graduate program. Eligible students should submit the 2026-2027 FAFSA and work with the graduate financial aid office at their BU school or college.
We recognize that students may require additional support beyond the federal Direct loan limits to finance the cost of their education. Many private lenders offer specialized financing options for graduate and professional students, covering up to the full cost of education without annual loan limits or aggregate borrowing limits.
Boston University provides information about credible.com, a free online loan selection tool that allows students to compare pre-qualified rates, terms, eligibility rules side-by-side, to help students find the private loan that best meets their needs.
Where should I go with other questions?
For additional support, graduate students are encouraged to reach out to their financial aid office.
