Federal student aid programs face changes in response to the Trump administration’s One Big Beautiful Bill Act (OBBA) that was signed on July 4, 2025. These changes directly affect undergraduate, graduate and professional student borrowers effective July 1, 2026.
The bill affects pell grants, federal student loans, loan caps and repayment plans.
Although there is no change in the Pell maximum award — $7,395 — for 2026-2027, the bill changes the eligibility criteria for the program.
Students and families with significant assets may no longer be eligible for the Pell Grant. Additionally, students that receive non-federal grants and scholarships that cover the entire cost of attendance (COA) are no longer eligible for the Pell Grant.
The Pell Grant is dependent on student aid index (SAI), as calculated by the Free Application for Federal Student Aid (FAFSA). Students may receive maximum pell, minimum pell or a calculated pell.
“This change will affect student-athletes on full ride scholarships, as well as other students whose institutional, state, and/or private aid meet or exceed full COA,” National Association of Student Financial Aid Administrators (NASFAA) wrote in a brief.
Additionally, there will be a change in the inclusion of foreign income that determines Pell eligibility. Though foreign income was previously listed in FAFSA, it is now automated to be included in adjusted gross income (AGI) when determining eligibility as noted by NASFAA.
The Pell also now expands to optional workforce programs. These are “short-term, career-focused programs” that will support workforce development and “expand Pell eligibility to previously illegible non-traditional educational pathways.”
The Federal Direct Loan Program also faces significant changes such as new limits starting July 1, 2026. These changes now eliminate the Direct PLUS Loan, referred as grad PLUS loan, that offered graduate or professional students to borrow “the cost of attendance (determined by the school) minus any other financial assistance you [they] receive” with 8.94% interest. This will be replaced by new unsubsidized Federal Direct Stafford loans.
This loan caps the annual limit at $20,500 for graduate students and $50,000 for professional students. The aggregate limit is $100,000 for graduate students and $200,000 for professional students.
Parent PLUS loans, for dependent undergraduates, also have new limits. “All parents (combined) may borrow $20,000 per year per dependent student and a $65,000 aggregate limit per dependent student (without regard to amounts forgiven, repaid, or discharged),” NASFAA states.
Additionally, there is also a new lifetime federal loan limit for all federal direct loans. This is now $257,500 for all levels of study.
Current Associated Students of UCI (ASUCI) President, Alondra Arevalo, shared her concern about student enrollment in undergraduate and graduate programs.
“Graduate PLUS loans is how most low and middle income students afford graduate programs, so this is definitely going to play a role in how and when students attend post-grad programs,” Arevalo said. On the undergraduate side, I think the changes for part-time students—such as the loan caps—will be a determining factor on if students can remain in school.”
There will also be changes to Student Loan Repayment. Going forward, there will be two eligible loan repayment plans. These include the Repayment Assistance Plan (RAP) and the Tiered Standard Repayment Plan.
RAP is an income-driven repayment plan that requires a $10 monthly minimum payment. Some key features include the elimination of negative amortization — the ability of the amount a person owes to increase due to interest — and no cap on monthly payment.
“Unlike existing IDR plans, RAP ensures that borrowers who make full, on-time monthly payments will be shielded from runaway interest and are able to make progress toward reducing the principal balance on their loan,” the US Department of Education said in a press release on March 27, 2026.
The Tiered Standard Repayment Plan requires “fixed monthly payments over 10, 15, 20, or 25 years.” This is based on “a borrower’s total outstanding loan balance, giving borrowers with higher debt lower monthly payments and more time to repay,” according to the Department of Education.
Arevalo encourages students to reach out for help during this period of change.
“It’s a period of uncertainty, so keep staying informed and always ask for help if you need clarification on anything at all,” Arevalo advises students.
Ayeza Shaur is a News Intern for the Spring 2026 quarter. She can be reached at ashaur@uci.edu.