Federal Student Loan Changes – One Big Beautiful Bill Act (OB3)
Beginning July 1, 2026, the One Big Beautiful Bill Act will introduce changes to federal student financial aid programs. These changes will take effect in the 2026-27 academic year and may affect your loan eligibility, how much you can borrow and your repayment options. This page explains what these changes mean for incoming and current students at our University.
This page includes the most recent details and information available. Additional updates can also be found on the Studentaid.gov webpage.
Incoming Students
All newly enrolled students who receive federal aid for the 2026-27 academic year will fall under the new OB3 program policies. These changes go into effect on July 1, 2026 and may impact how you plan and pay for college, including the types of loans you can receive and how much you can borrow.
Undergraduate Students and Parents
If you enroll and receive your first federal loan on or after July 1, 2026, the new OB3 program policies will apply to you. Here’s what you need to know:
- Parent PLUS loans will be capped at $20,000 annually per dependent undergraduate with a $65,000 lifetime cap per student.
Graduate and Professional Students
If you enroll and receive your first federal loan on or after July 1, 2026, the new OB3 program policies will apply to you. Here’s what you need to know:
- Graduate PLUS loans will no longer be available.
- Graduate students borrowing federal loans will be limited to Direct Unsubsidized loans with an annual limit of $20,500 (unchanged) and a new $100,000 aggregate limit.
- Professional students are classified separately and will have a higher annual limit of $50,000 (increase from $20,500) and a $200,000 aggregate limit.
- At UT Austin, professional programs are defined as Pharmacy (PharmD), Law (L.L.B or J.D.), Medicine (M.D) and Clinical Psychology (Psy. D. or Ph.D.).
- Lifetime federal borrowing will be capped at $257,500 for graduate and professional students. This does not include undergraduate loans borrowed before July 1, 2026.
If you’re a first-time graduate student admitted for Summer 2026, you may still be eligible for Grad PLUS loans under current rules if your Direct Loans are disbursed on or before July 1, 2026.
Current Students
Current students enrolled in Spring or Summer 2026 who have already borrowed federal direct loans may qualify for legacy rules, depending on their enrollment and borrowing history. However, some of the new changes may still apply.
Legacy eligibility is determined by federal law and is automatically applied if a student qualifies. It cannot be chosen, waived or declined.
Undergraduate Students and Parents
If you’ve borrowed your first federal loan for your current program and received your aid before July 1, 2026, you may be eligible for legacy rules. Here’s what that means:
- No change to existing loans or terms.
- Lifetime borrowing limits follow traditional program-based caps.
- Undergraduate borrowers will keep current annual limits and repayment options.
- Parent borrowers may continue borrowing Parent PLUS loans with no annual or lifetime cap.
If you change academic programs or begin a new program, different loan rules may apply. Here’s what’s changing:
- Parent PLUS loans will be capped at $20,000 annually per dependent undergraduate with a $65,000 lifetime cap per student.
Graduate and Professional Students
If you borrow your first federal loan for your current program on or after July 1, 2026, new rules will apply. Here’s what’s changing:
- Graduate students borrowing federal loans will be limited to Direct Unsubsidized loans within new annual limits.
- Lifetime federal borrowing will be capped at $257,500 for graduate and professional students. This does not include undergraduate loans borrowed before July 1, 2026.
- Professional students are classified separately and will have a higher annual limit of $50,000 (increase from $20,500) and a $200,000 aggregate limit.
- At UT Austin, professional programs are defined as Pharmacy (PharmD), Law (L.L.B or J.D.), Medicine (M.D) and Clinical Psychology (Psy. D. or Ph.D.).
If you’ve borrowed your first federal loan for your current program before July 1, 2026, you may be eligible for legacy rules.
Enrollment Level and Loan Limits
Under the new federal loan rules, annual loan limits (the total amount you can borrow per year) are prorated based on the number of hours a student is enrolled each semester. All students (new and legacy) enrolled less than full time in the fall semester may receive reduced loan amounts in the spring, even if they remain eligible for federal loans.
Repayment Plans
Your federal student loan repayment plan options depend on when your federal loans were disbursed.
If your loans were disbursed before July 1, 2026, you may be able to remain in your current repayment plan for a limited time. Some existing repayment plans will be phased out, and you may need to select a new plan in the future. Your loan servicer will notify you if action is required.
For loans disbursed on or after July 1, 2026, federal student loan repayment will be limited to the following options:
Tiered Standard Repayment Plan
- Fixed monthly payments.
- Repayment terms ranging from 10-25 years, depending on loan balance.
Repayment Assistance Plan (RAP)
- Monthly payments based on your income and family size.
- Reduces most current income-driven repayment plans for new loans.
- Designed to reduce unpaid interest and loan balances over time.
Parent PLUS loans are not eligible for income‑based repayment under these new rules.
To compare repayment options and estimate monthly payments under the new plans, use the Loan Simulator. Additional information about federal loan repayment is available on our Loans webpage.
FAQs
Will this impact my UT scholarships?
No. These changes only apply to federal loans and do not impact the eligibility or availability of UT scholarships or Texas Advance Commitment (TAC) funds.
Does this impact my Pell Grant eligibility?
No. Changes to federal student loans do not directly affect Pell Grant eligibility. However, this law also includes updates to Pell Grant rules, so it’s important to understand how you may be affected.
If nonfederal grants or scholarships fully cover your cost of attendance before your Pell Grant is awarded, you will not be eligible for a Pell Grant for that term. Submitting your FAFSA early helps ensure your Pell Grant eligibility is reviewed before scholarships are finalized.
How do I check my loan status?
Log in to Studentaid.gov with your FSA ID and select “My Loans.”
What should I know about my loans before dropping below full-time enrollment?
Federal loan amounts are prorated based on your enrollment level. This means you may only borrow a portion of the full‑time loan amount that matches your enrolled hours. If you enroll less than full‑time, your federal loan eligibility may be reduced.
Dropping below full‑time can affect your current loan disbursement, your remaining loan eligibility for the year and how much you may need to pay out‑of‑pocket.
This applies to undergraduate, graduate and professional students.
Before dropping a course or changing your enrollment status, we encourage you to contact Texas One Stop for guidance.
What options do I have if my cost of attendance is no longer fully covered without these loans?
You can apply for scholarships in the Longhorn Awards and Student Scholarship Opportunities (LASSO) portal or consider private loans. Keep in mind:
- Private loans require a credit check.
- Most students will need a co-signer if they have little or no credit history.
Visit the Loans webpage for more information.
What can I do now?
Here are a few steps you can take:
- Know when you first borrowed federal loans for your program.
- Keep an eye on updates from Texas One Stop and Federal Student Aid.
- Plan ahead if you expect to borrow for graduate or professional school beginning in 2026-27.
Texas One Stop will share more guidance as federal rules are finalized.
Can I opt out of these federal loan changes?
You can choose whether or not to borrow federal student loans, but you cannot opt out of the federal rules that apply to those loans.
If you accept federal loans, the borrowing limits and repayment rules set by federal law will apply based on when your loans were disbursed and your enrollment status.
If you decide not to use federal loans, you can explore other options to help cover your costs, such as scholarships, payment plans or private loans.