One Big Beautiful Bill Act Updates
On July 4, 2025, the One Big Beautiful Bill Act was signed into law, introducing significant revisions to federal student aid programs. Some of these changes went into effect immediately, while others will go into effect on July 1st, 2026. Below are some highlights of the changes to come.
***The One Big Beautiful Bill Act Updates page will continue to be updated as new information becomes available. ***
For Undergraduate Students
For New and Continuing Students:
Federal Student Loans
There are no changes to how much undergraduate students can borrow
Federal Grants:
The Pell Grant
- Closes the so-called “Pellionaire loophole” that allowed students and families with low incomes, but significant assets, to receive Pell Grants
- Students with an SAI equal to or greater than 14,790 (twice the maximum Pell Grant) are ineligible to receive a Pell Grant
- Some current students who received Pell Grants for the past two years through this loophole will lose eligibility in 2026-27
- Students who receive grants or scholarships from non-federal sources (institutional, state, or private) that cover their entire cost of attendance (COA) are ineligible to receive a Pell Grant, even if otherwise eligible for the program
- Foreign income is now included in the adjusted gross income (AGI) used to calculate Pell Grant eligibility on the FAFSA
- Some students and families with foreign income who received a Pell Grant for the past two years will lose eligibility in 2026-27
- Creation of the Optional Workforce Pell Grant Program, Effective July 1, 2026
- Pell Grant eligibility is expanded to certain short-term, career-focused programs
FSEOG Grant
- Eligibility remains the same
For Parents: Parent PLUS Loans
Beginning July 1, 2026, changes to the law affect how much parents can borrow from the Parent PLUS Loan program for their children’s college education and the available repayment options for those loans.
New federal borrowing limits cap the Parent PLUS Loan at $20,000 per year and $65,000 in total, but the law allows for a time-limited exception to new loan limits for currently enrolled students:
- In order for Parent PLUS Loan borrowers not be subject to the new loan limits:
- The student must remain continuously enrolled in the same program of study at the same institution as they were enrolled as of June 30, 2026, AND
- Either:
- The parent borrower must have had a Parent PLUS Loan disbursed for that same program before July 1, 2026, OR
- The student must have had a Direct Loan (subsidized or unsubsidized) disbursed for that same program before July 1, 2026
- If the above requirements are met, the new Parent PLUS Loan limits do not apply while the student is completing their program, for up to 3 years, provided the student remains continuously enrolled (i.e., does not withdraw or otherwise cease enrollment outside of scheduled breaks or non-required terms, such as summer)
- Parents of current students who do not currently meet these criteria can still qualify for this limited exception to the new loan limits if:
- The parent borrows a Parent PLUS Loan prior to July 1, 2026, OR
- The student borrows a Direct Loan (subsidized or unsubsidized) prior to July 1, 2026
For Graduate Students
What is changing and when?
Starting July 1, 2026, the Graduate PLUS loan program will be eliminated unless students qualify for a limited exception. Students who currently depend on Grad PLUS loans to help pay for school should be sure they know whether they qualify for the exception and what conditions could lead to the loss of Graduate PLUS eligibility.
The annual Direct Unsubsidized Loan limit remains unchanged at $20,500. However, there is a new $100,000 cap on the amount students can borrow in total (aggregate) for a graduate degree program and a new lifetime federal loan limit of $257,500 for all Federal Direct student loans (excluding Graduate or Parent PLUS loans) borrowed for all levels of study. Students who qualify for the limited exception, described below, that allows them to continue to borrow Graduate PLUS loans are also exempt from the new Direct Unsubsidized aggregate and lifetime limits
Limited Exception
The law allows some students to continue borrowing from the Graduate PLUS program without being subject to the new Direct Unsubsidized aggregate and lifetime borrowing limits under a limited exception through their time to completion, for a maximum of 3 years.
Students may qualify for the limited exception if:
- They remain continuously enrolled in the same program of study at the same institution they were enrolled as of June 30, 2026, AND
- They had a Direct Loan disbursed (Direct Unsubsidized or Graduate PLUS) for that same program before July 1, 2026
Student Loan Proration
If students enroll part-time in 2026-27 or future years, their federal Direct Unsubsidized and/or Graduate PLUS Loans (if they qualify to borrow a Graduate PLUS under the limited exception described above) must be prorated in accordance with changes to the law.
How will this work?
***We are still waiting for official guidance from the Department of Education***
For Professional Students
What is changing and when?
Starting July 1, 2026, the Graduate PLUS loan program will be eliminated unless students qualify for a limited exception. Students who currently depend on Graduate PLUS loans to help pay for school should be sure they know whether they qualify for the exception and what conditions could lead to the loss of Graduate PLUS eligibility.
There is a new, higher annual Direct Unsubsidized Loan limit of $50,000. There is also a new cap of $200,000 on the amount students can borrow in total (aggregate) for a professional degree program and a new lifetime federal loan limit of $257,500 for all Federal Direct student loans (excluding Graduate or Parent PLUS loans) borrowed for all levels of study. Students who qualify for the limited exception, described below, that allows them to continue to borrow Graduate PLUS loans are also exempt from the new Direct Unsubsidized annual, aggregate, and lifetime limits.
Who is considered a professional student?
Students in the following programs are considered professional students for purposes of federal student loan limits:
- Pharmacy (Pharm.D.)
- Dentistry (D.D.S. or D.M.D.)
- Veterinary Medicine (D.V.M.)
- Chiropractic (D.C. or D.C.M.)
- Law (LL.B. or J.D.)
- Medicine (M.D.)
- Optometry (O.D.)
- Osteopathic Medicine (D.O.)
- Podiatry (D.P.M., D.P., or Pod.D.)
- Theology (M.Div. or M.H.L.)
- Clinical Psychology (Psy.D. or Ph.D.)
Limited Exception
The law allows some students to continue borrowing from the Graduate PLUS program without being subject to the new Direct Unsubsidized aggregate and lifetime borrowing limits under a limited exception through their time to completion, for a maximum of three years
Students may qualify for the limited exception if:
- They remain continuously enrolled in the same program of study at the same institution as they were enrolled as of June 30, 2026, AND
- They had a Direct Loan disbursed (Direct Unsubsidized or Graduate PLUS) for that same program before July 1, 2026
- The limited exception also maintains the current annual limit of $20,500 for Direct Unsubsidized Loans.
Student Loan Proration
If students enroll part-time in 2026-27 or future years, their federal Direct Unsubsidized and/or Graduate PLUS Loans (if they qualify to borrow a Graduate PLUS under the limited exception described above) must be prorated in accordance with changes to the law.
How Will This Work?
***We are still waiting for official guidance from the Department of Education***
Federal Loan Repayment Plans
Student Loan Repayment Options As of July 1, 2026:
https://www.nasfaa.org/uploads/documents/OB3_Repayment_Plan_Chart.pdf
Loan proration under the One Big Beautiful Bill Act (OB3)
Federal direct loans are required to be prorated (reduced proportional to enrollment) for students enrolled less than full-time beginning with the 2026-2027 academic year. This reduction may occur even if the student’s billed hours remain unchanged.
Students must be enrolled full-time in both the fall and spring semesters for loans not to be prorated. For undergraduate students, 12 hours is full-time per semester, so a student’s total enrollment across the academic year (fall and spring) must equal or exceed 24 hours to receive their full subsidized and unsubsidized loans. For graduate students, full-time is 9 hours per semester, so the total enrollment across the academic year (fall and spring) must equal or exceed 18 hours to receive their full Unsubsidized loans.
Undergraduate students who report fewer than 12 hours of enrollment will have their federal student loans prorated based on the hours they are registered prior to the first financial aid disbursement.
Students who do not report fewer than 12 hours of registration after the 10th day will have their federal loans prorated and adjusted.
How loans are prorated: Loan proration means your annual federal student loan limit is reduced proportionately if you enroll less than full-time. Instead of getting the maximum amount, your eligibility is adjusted to match the exact percentage of full-time credit load you are taking.
OBBB Legacy Provision for Graduate & Professional Students
Beginning July 1, 2026, the federal Graduate PLUS Loan program is no longer available for new graduate and professional student borrowers. However, some continuing students may qualify for the OBBB Legacy Provision, which allows them to continue borrowing under the previous federal loan rules for a limited period of time.
Who Qualifies for the Legacy Provision?
You may qualify if you:
- Received a Federal Direct Loan (Direct Unsubsidized or Graduate PLUS Loan) for your current graduate or professional program before July 1, 2026.
- Remain continuously enrolled in the same graduate or professional credential program at UIC.
- Complete your program within the published length of the program or within three additional academic years after July 1, 2026, whichever is less.
How Long Can I Keep My Legacy Status?
Legacy eligibility is not permanent. You may continue to borrow under the previous federal loan rules until the earlier of:
- Completing your current academic program, or
- Reaching the maximum legacy period of three additional academic years after June 30, 2026.
Once your legacy eligibility ends, you will be subject to the current federal loan limits.
What Happens if I Withdraw from a Class or Take a Leave of Absence?
Withdrawing from a class or taking an approved leave of absence does not automatically end your legacy eligibility. However, your continued eligibility depends on whether you:
- Return to the same graduate or professional program at UIC.
- Maintain continuous enrollment as defined by your academic program.
- Complete your program within the allowable legacy timeframe.
If you return after your legacy eligibility has expired or enroll in a different academic program, you will be subject to the current federal loan limits.
What Happens if I Change Programs?
The legacy provision is tied to the specific graduate or professional program in which you received your qualifying federal loan.
Examples of changes that generally end legacy eligibility include:
- Completing a master’s degree and beginning a doctoral program.
- Completing one professional degree and beginning another.
- Transferring into a different graduate or professional degree program.
- Transferring to another institution.
If you begin a new graduate or professional program after July 1, 2026, you are considered a new borrower for that program and will be subject to the current federal loan limits, even if you previously qualified for the legacy provision.
How Does the Published Length of My Program Affect My Eligibility?
Your legacy eligibility is limited to your program’s published length or three additional academic years after July 1, 2026, whichever is less.
- Most master’s degree programs have a published length of two academic years.
- A Doctor of Nursing Practice (DNP) program may have a published length of five academic years.
An academic year is measured by your enrollment over the Fall, Spring, and Summer terms.
For example:
- If you enroll in the Fall, Spring, and Summer terms, this counts as one academic year.
- If you enroll in the Fall and Spring terms only, this also counts as one academic year.
- If you enroll in the Fall term, do not enroll in the Spring term, but return for the Summer term, this is still considered one academic year for purposes of the legacy provision.
Students must remain enrolled in the same graduate or professional program and complete their degree within the program’s published length or the maximum legacy timeframe, whichever is less. If you are considering withdrawing from a term or taking time away from your program, we encourage you to contact the Office of Student Financial Aid & Scholarships before making changes, as doing so may affect your legacy eligibility.
Questions?
If you are considering withdrawing from a course, taking a leave of absence, changing your graduate or professional program, or transferring to another institution, we encourage you to contact the Office of Student Financial Aid & Scholarships before making your decision. Changes to your enrollment or academic program may affect your eligibility to remain under the OBBB Legacy Provision.