What is the One Big Beautiful Bill Act (OB3), and why am I hearing about it now?

The One Big Beautiful Bill Act, also referred to as OBBB or OB3, was enacted by Congress in July 2025 and makes significant changes to federal student loan programs. While the law has already passed, the specific rules governing how it will be implemented have not yet been finalized. In addition, most student loan changes do not take effect until July 1, 2026.

The U.S. Department of Education is responsible for issuing the final regulations that implement the law. The Department is currently developing its regulatory guidance, which remains in draft form.

Does OB3 affect my financial aid for the 2025–26 academic year?

  1. Yes, it is possible, depending on when a student’s Direct Loan is first disbursed.
    • There are no changes to federal student loans or other financial aid programs for the 2025–26 academic year if a student’s first Direct Loan is disbursed by June 30, 2026. In those cases, standard eligibility rules, borrowing limits, and PLUS Loan access remain in place.

    • If a student’s first federal Direct Loan disbursement occurs on or after July 1, 2026, OB3 rules apply. This may affect borrowing limits and other loan-related provisions. Students whose first Direct Loan is disbursed on, or after this date will also lose eligibility for Graduate PLUS Loans. See below for more information.

       

  2. After July 1, 2026, students who begin attendance in a session and later withdraw, stop attending, or do not successfully complete a Fall or Spring session course* may become subject to the new loan provisions under the OB3 rules. Students who withdraw from, stop attending, or do not successfully complete an optional Summer session do not lose access to standard eligibility rules, also referred to as "legacy eligibility," solely because of the summer withdrawal, provided they subsequently attend the following Fall session.

    *Zero-unit courses and courses that are not applicable to the student's program of study do not count toward successfully completing a session.
     

When do the OB3 student loan changes take effect?

Most federal student loan changes under OB3 take effect for loans first disbursed on or after July 1, 2026.

Where can I find official federal guidance?

This page is provided to help students understand upcoming changes. It is based on the school’s good-faith interpretation of the law and early guidance but is not official federal guidance. Students should always refer to federal sources for definitive information, including studentaid.gov.

Were the rules regarding the One Big Beautiful Bill Act's impact on federal financial aid finalized by July 1, 2026?

No. As of the date of this update (September 2026), guidance from the U.S. Department of Education (ED) has not been fully finalized. Additional information may still be released, and existing guidance remains subject to change.

  • Although the One Big Beautiful Bill Act became law on July 1, 2026, schools did not receive all final regulations, operational guidance, and implementation details before the effective date. Additional guidance continues to be released.
  • As a result, colleges and universities have had to implement changes while awaiting clarification on certain requirements. UMass Global continues to monitor developments closely and will make any necessary updates as additional guidance is issued by ED.
  • Students should be aware that information regarding federal financial aid eligibility, awarding, and administration may continue to evolve as further guidance is released and implementation requirements are clarified.
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Frequently Asked Questions

1. Part-Time Enrollment and Loan Proration

The law includes a provision requiring loan amounts to be prorated for students enrolled less than full-time. This means part-time students may only be eligible for a portion of the annual loan limit.

All students must enroll full time to qualify for full annual loan eligibility. Undergraduate students must enroll in and complete 24 credits per academic year. Graduate students must enroll in and complete 18 credits. If a student enrolls in and completes fewer credits than required, such as graduating early or attending for less than a full academic year, their loan will be prorated. This means the loan amount is reduced based on the number of credits enrolled in and completed. Example: An undergraduate student enrolls in 12 credits for the academic year. The full academic year requirement is 24 credits. The student enrolled in 12 ÷ 24 = 50%, so the loan is reduced to 50% of the annual eligibility amount. 

Students who do not meet the full academic year credit requirements will have their loan eligibility reduced accordingly. Students who drop courses after disbursement may have future disbursements revised accordingly.

2. Graduate Student Loans

A Graduate PLUS loan is a federal loan available to students enrolled in graduate or professional programs to help cover education costs not fully covered by other financial aid. Graduate PLUS loans allow students to borrow up to the school’s cost of attendance minus other aid and require a basic credit check, but they are not based on financial need. These loans can be used for tuition, fees, and other education related expenses, and they typically have more borrower protections and lower interest rates than most private student loans. As of January 2026, Graduate PLUS Loans remain available under current federal rules. However, eligibility is scheduled to change and new borrowers will lose eligibility beginning July 1, 2026, under the One Big Beautiful Bill Act.

Beginning July 1, 2026, Grad PLUS loans will no longer be available to new graduate student borrowers.

Yes, in limited situations. A student who borrowed any Direct Loan for their current graduate program before July 1, 2026 may remain eligible to apply for Grad PLUS loans while completing that same program, for up to three additional years or until the program is completed, whichever comes first.

The student must remain enrolled in the same program at the same school for which they borrowed a Direct Loan before July 1, 2026.

  • Changing programs would end continuing eligibility for Grad PLUS loans. A program change includes:
    • Moving between undergraduate and graduate programs OR
    • Moving between different graduate programs.
  • In addition, a withdrawal, whether official or unofficial, may also result in the loss of Graduate PLUS eligibility.

No. The only way to become subject to the new borrowing limits is to withdraw from the program and later begin again under the new rules that began July 1, 2026.

3. Direct Unsubsidized Loan Limits

  • For professional programs starting after July 1, 2026, students may borrow up to $50,000 per year with a $200,000 lifetime limit.
  • For all other graduate programs, students may borrow up to $20,500 per year with a $100,000 lifetime limit.

We currently do not have any programs that meet the definition.

Students who borrowed graduate Unsubsidized loans before July 1, 2026 may continue to borrow under the current aggregate limit of $138,500 while completing the same program, for up to three additional years or until the program is completed, whichever comes first.

4. Undergraduate Loans

No. There are no changes to annual or aggregate undergraduate loan limits.

Yes. Undergraduate loans will count toward the new lifetime borrowing limits that apply across all programs.

5. Parent PLUS Loans

Beginning July 1, 2026, Parent PLUS loans will be capped at $20,000 per student per year with a $65,000 lifetime limit per dependent student.

Yes. Parents who borrowed Parent PLUS loans for a student before July 1, 2026 may continue borrowing under current limits for up to three additional years or until the student completes the program, whichever comes first.

6. Repayment Changes

For new loans first disbursed on or after July 1, 2026, current income driven repayment plans such as IBR, PAYE, and SAVE will be eliminated and replaced with a new Repayment Assistance Program called RAP.

Loans disbursed after July 1, 2026 will be limited to RAP or standard repayment plans. Earlier loans may remain eligible for existing repayment options depending on the plan.

No. RAP borrowers are not locked into a 30-year repayment plan. Borrowers may switch to a standard repayment plan with terms ranging from 10 to 25 years.

  1. Borrowers with no new loans made on or after July 1, 2026 may continue using Standard, Income Based Repayment, Graduated, or Extended plans and may also opt into RAP.
  2. Borrowers currently enrolled in ICR, PAYE, or SAVE must transition to a new repayment plan by July 1, 2028. If no selection is made, the borrower will be placed into RAP.

7. How to Plan Ahead

If you are weighing a two- or three-year master’s program, a professional degree, or a program with extended clinical or research requirements, it helps to start planning early.

  1. Begin by connecting with your one stop specialist. Ask how the new federal loan rules may apply to your specific program and get an idea of the full cost of attendance. This means a total of both direct and indirect costs. UMass Global’s current Cost of Attendance page can be found here.
  2. Next, look at the federal loan amounts you may be eligible for based on the year you expect to start. If there is a gap between your total costs and the federal aid available under the new limits, it may be time to explore additional options.
  3. If you are considering private or nonfederal loans, be realistic about credit requirements. Many private loans are credit-based. If you have a limited credit history, a U.S.-based cosigner with strong credit can help improve approval chances and pricing. International students studying in the U.S. often need a U.S.-based cosigner as well.
  4. When comparing private loan options, pay close attention to interest rate ranges. Federal loans use a single fixed rate each year, while private loans often advertise a range. The lowest advertised rate is typically available to a small number of borrowers with very strong credit. You may want to ask lenders what percentage of applicants qualify for their lowest rate.
  5. Also consider options beyond loans. Look for external scholarships that are targeted to your program or degree.
  6. You may also check with your employer to see if they offer tuition benefits.