Issue/Question
The One Big Beautiful Bill Act (OB3) is the budget reconciliation package that was approved by Congress on July 4, 2025, to ensure continued funding for many federal expenditures. While it includes a broad range of topics and policy changes, we are focusing specifically on the aspects that impact Federal Student Aid, effective with the 2026-2027 academic year. OB3 introduces various changes that will impact all categories of students. This page provides an overview of key changes.
BHSU is closely monitoring the implementation of these changes. While some information is currently available, many provisions require additional guidance from the U.S. Department of Education. The summary below reflects what is known at this time and is subject to change as U.S. Department of Education releases final regulations and guidance. We will continue to update this information as guidance is provided.
Environment
Resolution
Federal Pell Grant
Beginning in the 2026-2027 academic year, students will not be able to receive the Pell Grant in the following situations:
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Students are not eligible for the Pell Grant if a student receives scholarships that meet or exceed a student’s full cost of attendance.
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If a student’s Student Aid Index (SAI) is at least two times the maximum Pell Grant award of $7,395 (which will be 14,790 and above), the student is not eligible for the Pell Grant.
Federal Direct Loans
Beginning in the 2026-2027 academic year, there will be changes to the Federal Direct Loans program that will impact all student borrowers, mainly graduate and professional students as well as parents of undergraduate dependent students. If you are planning to borrow federal student loans to help pay for your education for the 2026-2027 academic year or later, we encourage you to review these updates.
Loan Limits
The bill establishes a total lifetime borrowing limit of $257,500 for federal student loans. This limit applies to Subsidized, Unsubsidized, and Graduate loans combined across undergraduate, graduate, and professional study. Parent PLUS loans are not included in this limit.
Graduate Student Loans
As of July 1, 2026, the bill eliminates Grad PLUS borrowing – which currently allows graduate students to borrow up to the full cost of attendance for their program of study. Grad students who received Grad PLUS funding prior to July 1, 2026, will be grandfathered into the program and can receive funds up to three years in the SAME program in which they began borrowing Grad PLUS loans. If a student changes their major after July 1, 2026, they will no longer be eligible for a Grad PLUS loan.
Legacy Provision: Students who have borrowed a Federal Direct Loan before July 1, 2026, will benefit from a legacy provision that allows them to borrow based on previous loan limits for up to three academic years, or until the end of their academic program, whichever comes first. To qualify, students must remain enrolled in the same program of study at the same institution. Students may continue to borrow under existing regulations, including Grad PLUS Loans, up to the Cost of Attendance for a maximum of three additional years, provided they meet both of the following conditions:
- The student is enrolled in the same credentialed program during the 2026–27 academic year as they were before July 1, 2026.
- The student obtained a federal student loan (Subsidized, Unsubsidized, or Graduate PLUS) for that specific program prior to July 1, 2026.
Parent PLUS Loan
As of July 1, 2026, parents can only borrow up to $20,000 per year per student and $65,000 lifetime per student. These limits apply to all parents of a student, so the maximum amount a student may receive in a year is $20,000, and the lifetime amount is $65,000, regardless of whether one or more parents are borrowing on the student’s behalf. This is a change from current regulations, which allows parents to borrow up to the full cost of attendance minus other aid per student.
Legacy Provision: Students or parents who have borrowed a Federal Direct Loan before July 1, 2026, will be allowed to borrow based on previous loan limits, for up to three academic years or the end of the dependent student's academic program, whichever comes first. To qualify, students must remain enrolled in the same program of study at the same institution.
Enrollment and Recalculation of Loan Eligibility
While there are no changes to the annual amount undergraduate students can borrow, eligibility for part-time student loan borrowers will be prorated based on the enrollment status according to the student’s academic level (freshman, sophomore, etc.). An undergraduate student is typically expected to enroll in 12 credit hours or more per semester for a total of 24 credit hours during the fall/spring academic period. A student enrolled in 12+ credit hours for the fall semester would be eligible for 50 percent of the annual loan limit. To qualify for federal loans, students must still meet the minimum half-time enrollment requirement based on their academic level.
Dropping or withdrawing from a course may reduce federal loan eligibility. Students should check with their professional academic advisor before making changes to their course schedule.