Federal Student Aid is changing significantly for students and parents beginning with the 2026-27 aid year due to the passage of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025. These changes set new annual and aggregate federal loan limits for both students and parents, require loan proration for less than full-time enrollment and impact eligibility for certain federal loan programs.  

Please Note:

Final implementation details are pending federal regulations from the U.S. Department of Education. Information on this page may be updated as additional guidance becomes available.  You are encouraged to visit the Federal Student Aid (FSA) website for the latest information. 

Effective Date: This applies to all federal loans processed for the 2026-2027 aid year.  At the University of Southern Maine (USM) this means all loans starting with the Summer 2026 semester.

One of the most important changes under OBBBA is the requirement that federal loan eligibility must be prorated based on a student’s enrollment status:

  • Students enrolled less than full-time (12+ credits Undergraduate and Law or 6+ credits Graduate) will have their annual loan limits reduced proportionally based on the percentage of the full-time enrollment.
  • For example, a half-time student (6 credits Undergraduate and Law or 3 credits Graduate) will receive only 50% of their annual loan limit.

This change affects both undergraduate and graduate borrowers and replaces prior practice where less than full-time enrollment might not have reduced loan eligibility the same way.

What stays the same:

  • Annual and aggregate loan limits remain the same (although undergraduate loans will count toward the new lifetime limits). 
  • Undergraduates will still have access to Federal Direct Subsidized and Unsubsidized Loans.


What’s new:

  •  Annual loan amounts are adjusted down if enrolled less than full-time
  •  Other loan types like the Federal Parent PLUS Loan now have new caps (see below)

Effective Date: July 1, 2026 for new borrowers who have not previously borrowed a direct loan in their current course of study.  Also applies to continuing graduate students who have been in their program three or more years.

OBBBA has major changes for graduate and professional student borrowing:

Graduate Students

  • Graduate PLUS Loans will no longer be available for new borrowers as of July 1, 2026*.
  • Graduate students will be limited to Direct Unsubsidized Loans with:
    • Annual limit: $20,500
    • Aggregate limit: $100,000
  • Loan amounts are prorated for less than full-time enrollment (6 graduate credits).

* Legacy Provision:

A student can continue to borrow from the Graduate PLUS Loan program if:

  1. The student has a Federal Direct Loan disbursed before July 1, 2026, while enrolled in a credentialed program of study, and
  2. The student is enrolled in the same credentialed program.

Under these conditions, the student may continue to borrow from the Graduate PLUS Loan for 3 academic years or until the end of the program of study, whichever comes first.

Effective Date: July 1, 2026 for new students and continuing students who have not previously borrowed a direct loan for their course of study or who have been in their program for 3 or more years.

Federal Parent PLUS loans will now be capped at:

  • $20,000* per year per dependent student
  • $65,000** lifetime per dependent student

These caps are new, replacing the prior ability to borrow up to the full cost of attendance without a lifetime limit.

* Limits apply to all parents of a student, regardless of whether one or more parents are borrowing on a student’s behalf

** Legacy Provision:

A parent can continue to borrow funds from the Parent PLUS Loan program exceeding these limits if:

  1. The student has a Federal Direct Loan disbursed before July 1, 2026, while the dependent student was enrolled in a credentialed program of study, and
  2. The student is enrolled in the same credentialed program.

Under these conditions, a parent may continue to borrow from the Parent PLUS Loan for 3 academic years or until their dependent student reaches the end of their program of study, whichever comes first.

All Federal student loan borrowing (excluding Federal Parent PLUS loans) will be subject to a combined lifetime cap of approximately $257,500 across all loan types — a first under federal law.

Students will no longer be eligible for a Pell Grant if their Student Aid Index (SAI) exceeds twice the maximum Pell award for a given year. For the 2026-2027 academic year, with a maximum Pell award of $7,395, any applicant with an SAI of $14,790 or higher will be ineligible for Pell Grant funding.

Students who receive grants or scholarships from non-federal sources covering their entire COA are ineligible to receive a Pell Grant, even if otherwise eligible for the program.