by Chloe Dent3
College students returning to campus this fall are beginning to see changes in federal financial aid and student loan policies following the passage of the One Big Beautiful Bill Act in 2025.
Signed into law July 4, 2025, the legislation, also known as Public Law 119-21, made significant changes to federal higher education programs. While some provisions took effect immediately, several of the changes affecting college students began July 1, 2026.
Changes to Student Loans
Beginning July 1, 2026, new graduate students face annual federal borrowing limits of $20,500, while professional students can borrow up to $50,000 annually. The law also establishes limits of $100,000 for graduate students and $200,000 for professional students.
The bill also eliminates the federal Grad PLUS loan program for new borrowers, subject to transition provisions, and places new limits on Parent PLUS loans. Parents of dependent students can borrow up to $20,000 per year for each dependent student, with a limit of $65,000 per dependent student.
Undergraduate students’ existing annual federal Direct Loan limits remain unchanged. However, the changes to Parent PLUS loans could affect families who use federal loans to help cover the cost of an undergraduate education.
The law also creates a new lifetime federal student loan limit of $257,500 for most borrowers. Parent PLUS loans borrowed by parents on behalf of dependent students are excluded from that lifetime limit.
The Department of Education says the changes are intended to reduce student debt, drive down the cost of graduate programs and encourage colleges to control costs. Critics of the changes have raised concerns that limiting federal borrowing could make it more difficult for some students to finance higher education, potentially pushing students toward private loans to cover remaining costs.
Pell Grant Eligibility Changes
Beginning with the 2026–27 award year, students with a Student Aid Index equal to or greater than twice the maximum Pell Grant award for that year generally are no longer eligible for a Pell Grant. For the 2026–27 award year, that threshold is $14,790.
The law also changes Pell eligibility for students receiving other forms of grant aid. Beginning July 1, 2026, a student generally cannot receive a Pell Grant during a period in which non-federal grants or scholarships equal or exceed the student’s cost of attendance.
Beginning July 1, 2026, eligible students can receive what are known as Workforce Pell Grants while enrolled in approved workforce programs. The law establishes specific requirements for those programs, including requirements related to workforce needs and recognized credentials.
Colleges Face New Accountability Requirements
Section 84001 of the law establishes consequences for certain educational programs whose graduates have low earnings compared with specified groups of working adults. Programs that fail the required earnings test in two out of three consecutive award years can lose eligibility to participate in the federal Direct Loan program.
The Department of Education finalized regulations implementing these accountability provisions in July 2026. Under the new framework, the federal government will evaluate programs based on the earnings of their graduates.
The changes could give colleges additional incentive to evaluate the cost and outcomes of individual academic programs, although the effect will vary by institution and program.
For students, the changes could eventually affect which programs are eligible for federal loans and how colleges evaluate programs based on graduates’ earnings.
What Does This Mean for OBU Students?
For an undergraduate student who does not use federal loans or Pell Grants, the immediate impact may be limited. For students who receive federal financial aid, rely on Parent PLUS loans or plan to attend graduate or professional school, the changes could be more significant.
At Oklahoma Baptist University, the changes raise questions about how the university’s financial aid office is preparing for the new rules and whether any OBU students are expected to be particularly affected.
As the 2026–27 academic year begins, students should pay attention to their financial aid awards and understand which types of federal aid they receive. Students with questions about their individual eligibility or borrowing limits should contact OBU’s financial aid office.
Students can also get more information from the U.S. Department of Education’s Federal Student Aid office at StudentAid.gov. Borrowers with active loans should contact their federal student loan servicer with questions about those loans.
