On July 4, 2025, the President of the United States signed the One Big Beautiful Bill Act (OBBBA) into law, bringing significant changes to federal programs, including federal student loans.

We understand that many Pilot families have questions about how these changes may affect paying for college. To help, we have provided a summary of the changes for undergraduate students, graduate students, and parents.

Please note: This information reflects the current understanding of the new rules and regulations for federal student financial aid. Rules may change with little notice. LSUS will update this page as new guidance is received from the U.S. Department of Education. For the most up-to-date information, visit the Federal Student Aid Updates page.

Changes Effective July 1, 2026

Pell Grant Eligibility

The bill includes two changes to Pell Grant eligibility requirements:

  • Students whose scholarships and other gift aid equal or exceed their full cost of attendance will not qualify for a Pell Grant.
  • Students with a Student Aid Index (SAI) equal to or greater than two times the current maximum Pell Grant award of $7,395 will not qualify for a Pell Grant.

Graduate Plus Loan Program

The Graduate PLUS Loan program will be discontinued and will not be available for new borrowers (anyone who has not had a federal student loan disbursed prior to July 1, 2026.

Legacy Provision

Students with a Federal Direct Loan (Unsubsidized and/or Graduate Plus) disbursed before July 1, 2026, who remain in the same program of study may continue to borrow under existing Graduate PLUS Loan rules for up to 3 more academic years or until their program ends – whichever comes first. Students must remain continuously enrolled in the same credentialed program to retain legacy borrowing eligibility. A withdrawal, a lapse in enrollment, or change in program/degree level may terminate the legacy provision.

Loan Limit Flow Chart

Use the outline below or our visual flowchart to determine your federal loan limit category for the 2026–2027 academic year.

2026-2027 Loan Limit Flow Chart

Parent Plus Loan Limits

Parents of new students may borrow up to $20,000 per academic year, with a $65,000 lifetime maximum per student. Parents who wish to borrow the full $20,000 annual maximum can apply directly on the Federal Student Aid Parent Plus page. It's important to borrow wisely, taking the maximum amount each year could potentially decrease loan eligibility before the student graduates.

Legacy Provision

Parents who borrowed before July 1, 2026, may continue borrowing under existing Parent PLUS Loan rules which allows for a PLUS loan up to the Cost of Attendance for up to 3 more academic years or the student completes their program – whichever comes first. Students must remain continuously enrolled in the same credentialed program to retain legacy borrowing eligibility. A withdrawal, a lapse in enrollment, or change in program/degree level may terminate the legacy provision.

Student Loan Borrowing Limits

Classification Yearly Limit Lifetime Limit
Undergraduate No Change No Change
Graduate (Unsubsidized Only) $20,500 $100,000 (excludes undergraduate borrowing)
Professional (Law, Veterinary Medicine, etc.) (Unsubsidized Only) $50,000 $200,000 (excludes undergraduate borrowing)

Total Lifetime Borrowing Limits: $257,500 (includes undergraduate and graduate borrowing)

Loan Proration Based on Enrollment Status

If you are enrolled less than full-time, your federal student loan eligibility may be reduced. This reduction is called loan proration. It means the total loan amount you can receive is adjusted based on the number of credit hours you take.

To calculate your prorated loan amount:

  • Divide your total enrolled credit hours by the number of credit hours required for full-time enrollment. Full time enrollment is:
    • Undergraduate-12 hours per semester/24 hours per year (fall/spring)
    • Traditional On-campus Graduate-9 hours per semester/18 per year (fall/spring)
    • Accelerated Online Graduate-6 hours per semester/18 per year (fall/spring/summer)
  • Multiply the result by your annual loan limit.

Undergraduate Student Loan Proration

A dependent undergraduate student enrolls in:

  • 6 credit hours in the fall semester
  • 6 credit hours in the spring semester

This equals 12 total credit hours for the academic year.

Calculation:

12 ÷ 24 = 0.50 (50% enrollment intensity)

0.50 × $7,500 (senior-level annual loan limit) = $3,750

Result: The student is eligible to receive $3,750 in federal student loans for the academic year.

Accelerated Online Graduate Student Loan Proration

A graduate student enrolls in 3 credit hours in the Fall semester and 6 credit hours in the Spring semester AND 3 credit hours in the Summer semester, for a total of 12 credit hours for the academic year.

Annual loan eligibility is prorated based on enrollment intensity. In this case:

12 (credit hours) ÷ 18 = 0.6666 (rounded to the nearest whole percentage)

0.67 × $20,500 = $13,735

Result: The student would be eligible to receive $13,735 in Direct Unsubsidized Loan funds for the academic year. Under prior regulations, the student could have received the full $20,500 annual loan limit, even when enrolled at this level.

Traditional On-Campus Graduate Student Loan Proration

A graduate student enrolls in 6 credit hours in the Fall semester and 6 credits hours in the Spring semester, for a total of 12 credit hours for the academic year.

Annual loan eligibility is prorated based on enrollment intensity. In this case:

12 (credit hours) ÷ 18 = 0.6666 (rounded to the nearest whole percentage)

0.67 × $20,500 = $13,735

Result: The student would be eligible to receive $13,735 in Direct Unsubsidized Loan funds for the academic year. Under prior regulations, the student could have received the full $20,500 annual loan limit, even when enrolled at this level.

Essential Information

Key takeaways to keep in mind while receiving federal loans:

  • Loan amounts may be reduced if you are enrolled less than full-time.
  • Proration is based on your total enrolled credit hours for the academic year.
  • This information reflects the most current guidance available but is subject to change.
  • Contact our financial aid office if you have questions about your eligibility.

Changes to Loan Repayment Plans

The Repayment Assistance Plan (RAP) is a new Income-Based Repayment (IBR) option established through the One Big Beautiful Bill.

Key Features of the Plan

  • Borrowers who are married and file taxes separately will not have their spouse’s adjusted gross income (AGI) or dependents included in the monthly payment calculation.
  • The minimum monthly payment is $10.
  • Monthly payments range from 1% to 10% of income, based on the borrower’s AGI.
  • Borrowers may receive a $50 reduction to their monthly base payment for each dependent.
  • The repayment term is 30 years.
  • The plan eliminates negative amortization, meaning loan balances will not grow due to unpaid interest.
  • There is no cap on monthly payments, even if the payment amount exceeds what would be required under the Standard Repayment Plan.
  • If a borrower makes an on-time payment and less than $50 is applied to the loan principal, the U.S. Department of Education (ED) may apply an additional principal payment. The additional amount will be the lesser of:
  • $50
  • the amount paid by the borrower minus the amount already applied to principal.

Transition from Current Repayment Plans

Current Income-Driven Repayment (IDR) plans and Standard Repayment plans will be phased out after existing borrowers transition to the new repayment structure.

The bill establishes a new Standard Repayment Plan with fixed repayment terms of 10, 15, 20, or 25 years. The repayment term is determined by the borrower’s total amount borrowed or outstanding loan balance for borrowers already in repayment.

The bill removes the requirement for borrowers to demonstrate a partial financial hardship to qualify for the Income-Based Repayment (IBR) Plan.

The legislation also:

  • Retains loan forgiveness after 25 years of qualifying repayment for existing borrowers.
  • Retains loan forgiveness after 20 years of qualifying repayment for new borrowers.
    • Allows eligible Income-Contingent Repayment (ICR) loans to be repaid under the IBR Plan.

Borrowers who receive new federal student loans on or after July 1, 2026, will have access to only two repayment plan options:

  • Standard Repayment Plan
  • Repayment Assistance Plan (RAP), an Income-Based Repayment (IBR) plan.

Borrowers who do not select a repayment plan will automatically be enrolled in the new Standard Repayment Plan.

Since all federal student loans must be repaid under the same repayment plan, borrowers who previously received loans before July 1, 2026, and later borrow additional loans on or after July 1, 2026, will also be limited to these two repayment options: the new Standard Repayment Plan, or RAP.

Borrowers who did not receive new federal student loans on or after July 1, 2026, may continue to enroll in the current Standard, Graduated, Extended, or current Income-Based Repayment (IBR) plans. These borrowers may also choose to enroll in the new Repayment Assistance Plan (RAP).

Current borrowers may remain in, enter, or switch between existing Income-Driven Repayment (IDR) plans through July 1, 2028.

Borrowers currently enrolled in the following repayment plans must transition to another eligible repayment option by July 1, 2028:

  • Income-Contingent Repayment (ICR)
  • Pay As You Earn (PAYE)
  • Saving on a Valuable Education (SAVE)

Borrowers who do not select a new repayment plan by July 1, 2028, will automatically be enrolled in RAP.

New Parent PLUS Loans first disbursed on or after July 1, 2026, must be repaid under the Standard Repayment Plan and are not eligible for the Repayment Assistance Plan (RAP).

Borrowers who enroll in RAP but also have loans that are not eligible for RAP, such as Parent PLUS Loans or certain consolidation loans, must repay those ineligible loans separately under an eligible repayment plan.

Consolidation loans first disbursed on or after July 1, 2026, are eligible only for:

  • The new Standard Repayment Plan
  • Repayment Assistance Plan (RAP).

Consolidation loans disbursed before July 1, 2026, including subsidized and unsubsidized consolidation loans, are treated like other eligible federal student loans. Borrowers currently enrolled in an Income-Driven Repayment (IDR) plan have until July 1, 2028, to select one of the following repayment options:

  • a Standard Repayment Plan
  • the current Income-Based Repayment (IBR) plan
  • RAP

If a consolidation loan was used to repay a Parent PLUS Loan, the loan must enter the Income-Contingent Repayment (ICR) Plan before July 1, 2028, to become eligible for IBR.

Borrowers who do not select a repayment plan by July 1, 2028, will be automatically assigned as follows:

  • loans eligible for RAP will be placed into RAP, and
  • loans not eligible for RAP will be placed into IBR.

Borrowers may rehabilitate a defaulted federal student loan up to two times, instead of the current limit of one time.

The minimum monthly payment required to rehabilitate a Direct Loan is set at $10.

The bill eliminates the economic hardship and unemployment deferment options.

Borrowers with loans made on or before July 1, 2027, may continue to use these deferment options under current rules.

  • These deferment options will be phased out once all loans made prior to July 1, 2027, have been fully repaid.

For loans made on or after July 1, 2027, borrowers may receive forbearance for up to nine months within any two-year period.

This differs from current rules, which allow for forbearance of up to 12 months at a time, with a total cumulative limit of three years.

Big Updates to Federal Student Aid - Federal Student Aid (studentaid.gov)

Federal Student Aid Changes Summary - National Association of Student Financial Aid Administrators (NASFAA)

FAQs about the OBBBA - National Association of Independent Colleges & Universities (NAICU)

Federal Student Loan Program Provisions Effective Upon Enactment Under the One Big Beautiful Bill Act (GEN-25-04) - Federal Student Aid Partners

This information reflects the most current guidance available but is subject to change. The LSUS Office of Financial Aid will continue to keep you informed as additional guidance becomes available.