Navigating a New Landscape in Federal Student Loans
Recent legislation, the FY2025 Budget Reconciliation Act (Public Law 119-21) (also known as the One Big Beautiful Bill Act), has introduced significant changes to the Federal Direct Loan program. These adjustments will impact how students and families at Brown University borrow to finance their education. To help you understand these changes, see a breakdown below on what’s new, who is affected, and when these changes take effect.
Key Changes to the Direct Loan Program
The new regulations bring about several important modifications to the federal student loan options. Here are the most critical updates effective July 1, 2026:
- Elimination of the Graduate PLUS Loan Program: The Graduate PLUS loan program, which allowed graduate and professional students to borrow up to the full cost of attendance, has been eliminated for new borrowers.
- New Limits on Parent PLUS Loans: Parents of dependent undergraduate students who take out Parent PLUS loans will now have an annual borrowing limit of $20,000 per student and a lifetime aggregate limit of $65,000 per student.
- Prorated Loans for Part-Time Students: If you are enrolled less than full-time, your annual loan limit will be prorated based on your enrollment intensity. This means the amount you can borrow in a given year will be proportional to the number of courses you are taking.
- New Repayment Plan: A new income-driven repayment plan called the Repayment Assistance Plan (RAP) will be introduced. For new borrowers, this and a new standard repayment plan will be the only options.
Who is Impacted and When?
New federal regulations are set to change the terms of the Direct Loan program, effective July 1, 2026. These changes will primarily impact new borrowers, particularly for graduate and professional students.
Applicability of New Regulations: The new rules will apply to any student who has not received a Direct Loan prior to July 1, 2026. For clarity, you are considered a new borrower subject to the new regulations if:
- You enroll in your program of study for the first time on or after July 1, 2026; or
- You were enrolled prior to July 1, 2026, but had not yet taken out a Federal Direct Loan.
Legacy Provision For current students and borrowers: A specific transitional provision, referred to as a "Legacy Provision," has been included for existing borrowers. This clause allows some students to continue accessing loans under previous rules. If you have a Federal Direct Graduate PLUS or Parent PLUS Loan made prior to July 1, 2026, while enrolled in a credentialed program, you may be able to continue borrowing for up to three academic years or until the student’s program of study is completed, whichever comes first. Additional details will be provided once guidance is available from the Department of Education.
Direct Loan Program Changes at a Glance
The following chart summarizes the key changes to the annual and aggregate loan limits for Direct Loans - Effective July 1, 2026.
Loan Type | Current Annual Limit | New Annual Limit | Current Aggregate Limit | New Aggregate Limit |
Undergraduate Subsidized | $3,500 (1st year), $4,500 (2nd year), $5,500 (3rd year and beyond) | Unchanged | $23,000 | Unchanged |
Undergraduate Unsubsidized for Dependent Students (Minus Subsidized Amounts) | $5,500 (1st year), $6,500 (2nd year), $7,500 (3rd year and beyond) | Unchanged | $31,000 | Unchanged |
Undergraduate Unsubsidized for Independent Students | $9,500 (1st year), $10,500 (2nd year), $12,500 (3rd year and beyond) | Unchanged | $57,500 | Unchanged |
Graduate/Professional Unsubsidized | $20,500 (general); higher for some health professions | $20,500 (Graduate), $50,000 (Professional) | Combined Unsub & PLUS $138,500 (general); $224,000 (health professions) | $257,500 |
Graduate PLUS | Up to cost of attendance minus other financial aid | Eliminated | Combined Unsub & PLUS $138,500 (general); $224,000 (health | Eliminated |
Parent PLUS | Up to cost of attendance minus other financial aid | $20,000 per dependent student | None | $65,000 per dependent student |
Frequently Asked Questions (FAQ)
Q: I am a current graduate/professional student with a Graduate PLUS loan. How will these changes affect me?
A: If you have a Federal Direct Graduate PLUS Loan made prior to July 1, 2026, while enrolled in a credentialed program, you may be able to continue borrowing for up to three academic years or until your program of study is completed, whichever comes first. Additional details will be provided once guidance is available from the Department of Education.
Q: As a parent, can I still borrow to cover the full cost of my child's education?
A: For new borrowers, the Parent PLUS loan program will now have an annual limit of $20,000 and a lifetime limit of $65,000 per dependent student. Families will need to explore other options if the need for financing exceeds these limits.
If you have a Federal Direct Parent PLUS Loan made prior to July 1, 2026, you may be able to continue borrowing for up to three academic years or until your student’s program of study is completed, whichever comes first. Additional details will be provided once guidance is available from the Department of Education.
Q: When do these new rules start?
A: The new rules will apply to any student who has not received a Direct Loan prior to July 1, 2026. For clarity, you are considered a new borrower subject to the new regulations if:
- You enroll in your program of study for the first time on or after July 1, 2026; or
- You were enrolled prior to July 1, 2026, but had not yet taken out a Federal Direct Loan.
Legacy Provision For current students and borrowers: A specific transitional provision, referred to as a "Legacy Provision," has been included for existing borrowers. This clause allows some students to continue accessing loans under previous rules. If you have a Federal Direct Graduate PLUS or Parent PLUS Loan made prior to July 1, 2026, while enrolled in a credentialed program, you may be able to continue borrowing for up to three academic years or until the student’s program of study is completed, whichever comes first. Additional details will be provided once guidance is available from the Department of Education.
Q: Will these changes affect my existing student loans?
A: For the most part, these changes apply to new loans. However, the introduction of the new Repayment Assistance Plan (RAP) may offer a new repayment option for existing borrowers.
Q: Where can I find more information?
A: Visit the Federal Student Aid website or the Federal Student Aid page for the One Big Beautiful Bill Act Updates for the latest updates and detailed information from the Department of Education.
Q: What are the loan limits for the current 2025 - 2026 academic year?
A: Visit the Federal Student Aid website to view the current 2025-2026 loan limits for Direct Subsidized and Unsubsidized Loans. The current 2025-2026 loan limit for Direct PLUS Loans is a maximum of the cost of attendance minus other financial aid received.