One Big Beautiful Bill Act Update

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA or OB3) was signed into law, resulting in changes to federal student aid programs that go into effect on July 1, 2026, for the 2026-2027 award year and forward. This page provides information about changes affecting recipients of federal student aid, including borrowers. We will continue to update this page as new information becomes available.

What All Students Need to Know

Loan Proration:

Students enrolled at any level – Undergraduate, Graduate, or Professional – will have their loan amounts adjusted should they enroll in less than full time hours.  To be considered full-time, students must be enrolled in at least the following depending on their classification:

  • Undergraduate = 12 or more credit hours
  • Graduate = 9 or more credit hours
  • Professional (students enrolled in the J.D. Program) = 6 or more credit hours

A student that enrolls in less than full-time hours based on their classification, but maintains at least half-time enrollment, will have their loan eligibility prorated.  Loans that could be affected are Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct Graduate PLUS Loans.  Direct Parent PLUS Loans are exempt from this proration.

Additionally, loan adjustments are based on annualized enrollment, which means dropping courses could have an effect on future loan disbursements.  Examples have been provided below, and it is recommended that if you are thinking of enrolling part-time or dropping a class that you speak with Student Financial Services first to understand the implications.

Kamala Khan is an undergraduate student who begins the Fall 2026 semester enrolled in 12 credit hours (full-time).  As a first-year, dependent student (as determined by the Free Application for Federal Student Aid), Kamala could qualify for up to an annual maximum of $3,500 in Direct Subsidized Loan and $2,000 in Direct Unsubsidized Loan.  Shortly after her the Fall portions of her loans disburse, Kamala drops to 6 credit hours.  She then enrolls in 12 credit hours for the Spring semester.

  • Minimum number of credit hours to be considered full-time for the full academic year (Fall and Spring) = 24 credit hours (12 credit hours per semester)
  • Kamala begins the Fall semester in 12 credit hours
    • 12 / 24 = 50%
      • Direct Subsidized Loan eligibility for Fall = 50% x $3,500 = $1,750
      • Direct Unsubsidized Loan eligibility for Fall = 50% x $2,000 = $1,000
  • After these Fall portions disburse, Kamala drops to 6 credit hours and later enrolls in 12 credit hours for the Spring semester
  • Total Annualized Enrollment for Kamala (Fall and Spring) = 18 credit hours
  • To determine the Spring semester loan disbursements, we must use the annualized enrollment and deduct the loan amounts disbursed in the Fall semester
    • Direct Subsidized Loan eligibility for the Spring = 18/24 = 75% x $3,500 = $2,625 - $1,750 (Fall disbursement) = $875
    • Direct Unsubsidized Loan eligibility for the Spring = 18/24 = 75% x $2,000 = $1,500 - $1,000 (Fall disbursement) = $500
  • To summarize, based on Kamala’s enrollment, including enrollment changes –
    • Direct Subsidized Loan
      • Fall semester disbursement = $1,750
      • Spring semester disbursement = $875
    • Direct Unsubsidized Loan
      • Fall semester disbursement = $1,000
      • Spring semester disbursement = $500

Sam Wilson is a graduate student who begins the Fall 2026 semester enrolled in 6 credit hours (less than full-time).  As a graduate student, Sam could qualify for up to an annual maximum of $20,500 in Direct Unsubsidized Loan.  Sam completes all 6 credit hours in the Fall semester and decides to enroll in 9 credit hours for the Spring semester.

  • Minimum number of credit hours to be considered full-time for the full academic year (Fall and Spring) = 18 credit hours (9 credit hours per semester)
  • Sam begins the Fall semester in 6 credit hours
    • 6 / 18 = 33%
      • Direct Unsubsidized Loan eligibility for Fall = 33% x $20,500 = $6,765
  • Sam enrolls in 9 credit hours for the Spring semester
  • Total Annualized Enrollment for Sam (Fall and Spring) = 15 credit hours
  • To determine the Spring semester loan disbursement, we must use the annualized enrollment and deduct the loan amount disbursed in the Fall semester
    • Direct Unsubsidized Loan eligibility for the Spring = 15/18 = 83% x $20,500 = $17,015 - $6,765 (Fall disbursement) = $10,250
  • To summarize, based on Sam’s enrollment –
    • Direct Unsubsidized Loan
      • Fall semester disbursement = $6,765
      • Spring semester disbursement = $10,250

What Parent Borrowers Need to Know

Beginning July 1, 2026, changes as a result of the OB3 will affect how much parents can borrow from the Parent PLUS Loan program for their children’s college education. There are no changes to how much undergraduate students can borrow.

New federal borrowing limits cap the Parent PLUS Loan at $20,000 per year and $65,000 in total per student, but the law allows for a limited exception to these new loan limits for currently enrolled students:

  • For Parent PLUS Loan borrowers to not be subject to the new loan limits:
    • The student must remain continuously enrolled in the same program of study at the same institution as they were enrolled as of June 30, 2026, AND
    • Either:
      • The parent borrower must have had a Parent PLUS Loan disbursed for that same program before July 1, 2026, OR
      • The student must have had a Direct Loan (subsidized or unsubsidized) disbursed for that same program before July 1, 2026.
    • If the above requirements are met, the new Parent PLUS Loan limits do not apply while the student is completing their program, for up to 3 years, provided the student remains continuously enrolled (i.e., does not withdraw or otherwise cease enrollment outside of scheduled breaks or non-required terms, such as summer).

It is not possible to opt-out of the limited exception.

After three academic years, or earlier if the student withdraws or otherwise ceases enrollment from their current school or completes their program of study, Parent PLUS Loan borrowers become subject to the new $20,000 annual and $65,000 aggregate loan limits.

There are new loan limits for the Parent PLUS Loan program.

  • $20,000 per dependent student, per year (annual limit).
  • $65,000 per dependent student, in total (aggregate limit).

The new aggregate limit of $65,000 means that if a parent chooses to borrow the annual maximum of $20,000 each year, the aggregate limit will be reached before the student completes their degree.  As such, it is important to plan accordingly. 

 Parents will need to pursue other financing options, such as payment plans or private/alternative loans. 

  • For information about payment plans, please visit our Payment Plans webpage.
  • For information about private/alternative loans, please visit our State and Private Loans webpage.
    • Please note that SMU and Student Financial Services cannot recommend any particular lender and has no preferred arrangements; however, this page provides resources to assist students, parents, and families with their search should they choose to go with this option.

What Graduate Students Need to Know

Beginning July 1, 2026, changes as a result of the OB3 will affect the amount graduate students can borrow and the types of loans available.

Starting July 1, 2026, the Graduate PLUS loan program will be eliminated unless students qualify for a limited exception.

The annual Direct Unsubsidized Loan limit remains unchanged at $20,500. However, there is a new $100,000 cap on the amount students can borrow in total (aggregate) for a graduate degree program, not including .  Students who qualify for a limited exception that allows them to continue to borrow Graduate PLUS loans are also exempt from the new Direct Unsubsidized aggregate and lifetime limits. 

The law allows some students to continue borrowing from the Graduate PLUS program without being subject to the new Direct Unsubsidized aggregate and lifetime borrowing limits under a limited exception for a maximum of three years or through their time to completion, whichever occurs sooner.

Students may qualify for the limited exception if:

  • They remain continuously enrolled in the same program of study at the same institution as they were enrolled as of June 30, 2026, AND
  • They had a Direct Loan disbursed (Direct Unsubsidized or Graduate PLUS) for that same program before July 1, 2026.

It is not possible to opt-out of the limited exception.

 After three academic years, or earlier if the student withdraws, ceases enrollment, or completes their program of study, they will no longer qualify for Graduate PLUS Loans and will become subject to the new aggregate and lifetime borrowing limits.

 Students will need to pursue other financing options, such as payment plans or private/alternative loans. 

  • For information about payment plans, please visit our Payment Plans webpage.
  • For information about private/alternative loans, please visit our State and Private Loans webpage.
    • Please note that SMU and Student Financial Services cannot recommend any particular lender and has no preferred arrangements; however, this page provides resources to assist students with their search should they choose to go with this option.


What Professional Students Need to Know

Beginning July 1, 2026, changes to the law will affect the amount professional students can borrow and the types of loans available. 

Starting July 1, 2026, the Graduate PLUS loan program will be eliminated unless students qualify for a limited exception.

There is a new, higher annual Direct Unsubsidized Loan limit of $50,000. There is also a new cap of $200,000 on the amount students can borrow in total (aggregate) for a professional degree program, including any Direct Unsubsidized Loan amounts borrowed at the Graduate level. Students who qualify for a limited exception that allows them to continue to borrow Graduate PLUS loans are also exempt from the new Direct Unsubsidized annual, aggregate, and lifetime limits.

Who is considered a professional student?

Students in the following programs are considered professional students for purposes of federal student loan limits:

  • Pharmacy (Pharm.D.)
  • Dentistry (D.D.S. or D.M.D.)
  • Veterinary Medicine (D.V.M.)
  • Chiropractic (D.C. or D.C.M.)
  • Law (LL.B. or J.D.)
  • Medicine (M.D.)
  • Optometry (O.D.)
  • Osteopathic Medicine (D.O.)
  • Podiatry (D.P.M., D.P., or Pod.D.)
  • Theology (M.Div. or M.H.L.)
  • Clinical Psychology (Psy.D. or Ph.D.) 

The law allows some students to continue borrowing from the Graduate PLUS program without being subject to the new Direct Unsubsidized aggregate and lifetime borrowing limits under a limited exception for a maximum of three years or through their time to completion, whichever occurs sooner.

Students may qualify for the limited exception if:

  • They remain continuously enrolled in the same program of study at the same institution as they were enrolled as of June 30, 2026, AND
  • They had a Direct Loan disbursed (Direct Unsubsidized or Graduate PLUS) for that same program before July 1, 2026.

Students qualifying for a limited exception maintain the current annual limit of $20,500 for Direct Unsubsidized Loans.  It is not possible to opt-out of the limited exception.

 After three academic years, or earlier if the student withdraws, ceases enrollment, or completes their program of study, they will no longer qualify for Graduate PLUS Loans and will become subject to the new annual, aggregate, and lifetime borrowing limits.

 Students will need to pursue other financing options, such as payment plans or private/alternative loans. 

  • For information about payment plans, please visit our Payment Plans webpage.
  • For information about private/alternative loans, please visit our State and Private Loans webpage.
    • Please note that SMU and Student Financial Services cannot recommend any particular lender and has no preferred arrangements; however, this page provides resources to assist students with their search should they choose to go with this option.