Important Federal Student Aid Changes
Last Updated 11-03-2025
Important Federal Student Aid Changes
Congress recently passed the “One Big Beautiful Bill Act” (OBBB) on July 4th, 2025. With it came several changes to the federal student financial aid programs. Please click the dropdowns to the right to view the information about these changes.
This information reflects the most current guidance available, but it is subject to change. Be sure to check this page, as we will be updating it as we get more information.
If you have any questions or concerns, please do not hesitate to email, call, or schedule an appointment with the Office of Financial Aid.
Undergraduate Students
Students enrolled less than full time will have a prorated annual loan limit in direct proportion to their enrollment status.
Students who get the minimum or maximum Pell Grant will be affected by these new rules. Pell grants will go to the students with the most financial need with amounts ranging between $740 and $7,395. Students with just minimum or maximum Pell should check their SAI and total aid to see if they’re still eligible. New rules apply:
- Anyone whose SAI is more than twice the amount of the maximum Pell award will be ineligible for the grant. For he 2026-2027 academic year, this means that students whose SAI is more than twice $7,395 (14,790) will not be eligible for any Pell awards (this limit does not apply for those receiving the Pell Grant under the Special Rule)
- Foreign earned income will be included in the annual gross income used to calculate eligibility for the Pell Grant
- Any student that receives scholarships that meet or exceed their cost of attendance (COA) may lose or see an adjustment to their Pell Grant eligibility.
Beginning with the 2026-2027 award year:
- Students with a Student Aid Index (SAI) more than twice the maximum Pell Grant limit will no longer be eligible for the Pell Grant
- The FAFSA calculation will include exemptions for the net worth of family farms on which a family resides, family-owned and controlled fishing businesses, and family-owned and controlled small businesses with 100 or fewer full-time or full-time equivalent employees
- Foreign earned income will be included in the annual gross income used to calculate eligibility for the Pell Grant
- Any student that receives scholarships that meet or exceed their cost of attendance (COA) may lose or see an adjustment to their Pell Grant eligibility.
This program allows parents to borrow federal loans for their dependent undergraduate students. Beginning July 1, 2026, this program will have new loan limits for NEW Parent PLUS Loan borrowers.
Effective July 1, 2026, parents of undergraduate students will be eligible to borrow up to $20,000 per year per student up to an aggregate of $65,000 per student.
Some exceptions apply:
- If students have already received Parent PLUS Loans, the parent can continue borrowing under the current borrowing limits (up to full cost of attendance) until June 30, 2029 or until the student completes their current program, whichever comes first.
- If the student changes program or major, the new loan limits apply to future PLUS loans borrowed.
- Parent PLUS Loans borrowed after July 1, 2026 are only eligible for the Standard Repayment Plan (more information under “Repayment Plans” below)
What do I need to do?
If you have not yet borrowed for your current program and think you may need Parent PLUS Loans in the future, borrow a small amount by May 1, 2026. This will give time for the Office of Financial Aid to process and originate the loan. This way, your loan will be disbursed by the July 1, 2026 deadline. Also, make sure your contact information is up-to-date on studentaid.gov. This way, your loan service provider will be able to contact you if needed.
Graduate Programs
This program currently allows graduate students to borrow a Graduate PLUS Loan up to the cost of attendance for their program of study. Beginning July 1, 2026, this program will no longer be available to NEW borrowers.
However, there are some exceptions:
- Students who borrowed at least once before the July 1st, 2026 deadline may continue borrowing. You can also continue to borrow up to $20,500 of Direct Unsubsidized loans while also maintaining your full eligibility of Graduate PLUS Loans.
- You can only borrow for your current program. If you switch programs, you will no longer be eligible.
- You will only be eligible until you complete your program or until June 30, 2029, whichever comes first.
What do I need to do?
If you have not yet borrowed for your current program and think you may need Graduate PLUS Loans in the future, borrow a small amount by May 1, 2026. This will give time for the Office of Financial Aid to process and originate the loan. This way, your loan will be disbursed by the July 1, 2026 deadline. Also make sure your contact information is up-to-date on studentaid.gov. This way, your loan service provider will be able to contact you if needed.
Effective July 1, 2026, all students enrolled less than full time will have a prorated annual loan limit in direct proportion to their enrollment status.
There will be new annual and aggregate loan limits for NEW borrowers.
If you have not borrowed a Direct Unsubsidized Loan for your current program before July 1st, 2026, you will be subject to the following annual and aggregate loan limits:
- Graduate Students: $20,500 annually and $100,000 aggregate
- Professional Students: $50,000 annually and $200,000 aggregate
- Combined Graduate and Professional Students: $200,000 aggregate
- Lifetime limit of $257,500 for all federal student loans including undergraduate loans
Miscellaneous
New loans disbursed after July 1, 2026 will only have two repayment options:
- Repayment Assistance Plan (RAP)– the new income-based repayment plan
- Standard repayment plan
Anyone who does not select between the two above options will be defaulted into the standard repayment plan.
Current borrowers that do not borrow any more funds after July 1, 2026 will have the option to enroll in:
- the current Standard Repayment plan,
- the Graduated Repayment Plan
- the Extended Repayment Plan
- or the Income Based repayment plans
but they must do so before July 1, 2028.
Anyone that takes out loans after July 1, 2027 will not be able to use the economic hardship nor unemployment deferments to pause payments. However, these loans will be eligible for up to 9 months of forbearance in a two-year period.
What do I need to do?
Please visit studentaid.gov to see whether you have taken out federal student loans and which types of loans you have utilized. Please also find your loan service provider to contact about your repayment options. Make sure all of your contact information is up-to-date so that your loan service provider can contact you if needed.
Repayment Assistance Plan (RAP)
This is not the same as the current Income-Based Repayment (IBR) Plan.
This payment plan takes into account a borrower’s ability to pay based on their adjusted gross income within some guidelines:
- Will reduce borrower’s principal by up to $50 if their monthly payment does not already do so
- A monthly payment of 1-10% of monthly gross income
- A minimum payment per month of $10
- $50 off monthly base payment per dependent
- 30-year repayment plan
- No monthly payment cap
- No negative amortization
- Will waive any interest not covered by monthly payment
Here is what you can expect the payment structure to be under this plan, using adjusted gross income:
- $10/month for those making less than $10,000 annually
- 1% of income for those making between $10,000 and $20,000 annually
- 2% of income for those making between $20,000 and $30,000 annually
- 3% of income for those making between $30,000 and $40,000 annually
- 4% of income for those making between $40,000 and $50,000 annually
- 5% of income for those making between $50,000 and $60,000 annually
- 6% of income for those making between $60,000 and $70,000 annually
- 7% of income for those making between $70,000 and $80,000 annually
- 8% of income for those making between $80,000 and $90,000 annually
- 9% of income for those making between $90,000 and $100,000 annually
- 10% of income for anyone making more than $100,000 annually
- Subtract $50 per month per dependent
- Minimum payment of $10 per month
Standard Repayment Plan
This is not the same as the current standard repayment plan.
Repayment term will be dependent on the amount borrowed:
- 10 years for those that borrowed less than $25,000
- 15 years for those that borrowed between $25,000 and $50,000
- 20 years for those that borrowed between $50,000 and $100,000
- 25 years for those who borrowed more than $100,000
Income-Based Repayment Plan
This plan will only be available to past borrowers with some modifications:
- Still includes loan cancellation after 25 years or 20 years for new borrowers
- No more requirement to demonstrate financial hardship
Consolidation Loans
- Any loans consolidated on or after July 1, 2026 will only be able to utilize the Repayment Assistance Plan or the Standard Repayment plan.
- For loans consolidated before July 1, 2026, a repayment plan must be chosen before July 1, 2028, or the loan will be placed into either RAP or an IBR.
- Any borrowers in an Income Driven Repayment (IDR) Plan prior to July 1, 2026 will be able to select between a Standard, Income-Based Repayment, or Repayment Assistance Plan so long as they do so before July 1, 2028. However, if the consolidation was used for a Parent PLUS Loan, it must enter repayment before July 1, 2028 to be able to utilize Income-Based Repayment.
Parent PLUS Loans
Any Parent PLUS Loans borrowed after the July 1, 2026 deadline will only be eligible to use the Standard Repayment Plan. The following rules apply:
- In order to use the Income-Based Repayment Plan, the parent must have consolidated the loan by July 1, 2026 and opt into the IBR before July 1, 2028.
- Anyone that fails to select a repayment plan before July 1, 2028 will automatically be enrolled in RAP. Any loans that do not qualify for RAP will be automatically enrolled in the Standard Repayment Plan.
- If some loans are borrowed before July 1, 2026 and some are borrowed after, they must all be under the Standard Repayment Plan.
Public Service Loan Forgiveness (PSLF)
The new Repayment Assistance Plan (RAP) will count toward PSLF. Borrowers will still need to meet the other requirements for forgiveness.
Whereas borrowers could previously rehabilitate a defaulted loan just once, they will now be able to rehabilitate it up to two times. The minimum rehabilitation payment will be $10.
Were there changes to the federal undergraduate lending programs?
No. An earlier version of the bill proposed eliminating the Subsidized Direct Loan Program, but this did not make it into the final Act.
What degree programs are considered “professional” programs?
A professional degree is “A degree that signifies both completion of the academic requirements for beginning practice in a given profession and a level of professional skill beyond that normally required for a bachelor’s degree, which a professional licensure is generally required.”
Currently, Valpo’s professional programs only include:
- Doctor of Nursing Practice (DNP)
- Doctor of Occupational Therapy (OTD/DrOT)
The Department of Education is currently working on creating clearer language on their definition of professional programs.
Is the Physician Assistant program considered a professional program?
Currently, no. The PA program currently does not fall under the federal guidelines for a professional program.
The Department of Education is currently working on creating clearer language on their definition of professional programs.
Will I still be eligible for the Pell Grant?
Please see the dropdown above for more information on changes to the Pell Grant program. Generally, students will remain eligible for the program if:
- Their scholarships do not exceed their Cost of Attendance (COA)
- They do not have a Student Aid Index (SAI) greater than twice the maximum Pell limit
The provision that originally proposed changing the definition of full-time enrollment for Pell eligibility and eliminated Pell for students under half-time status did not make it into the final version of the Act.