OBBBA Is Now in Effect: What Actually Changed on July 1, 2026

→ Parent PLUS caps: $20,000/year, $65,000 total per student

Parent PLUS loans for enrollment periods starting on or after July 1, 2026 are capped at $20,000 per year and $65,000 in total for each dependent student, counting both parents and earlier PLUS loans for that student. The previous rule allowed borrowing up to the cost of attendance minus other aid, with no dollar cap. The exception follows the student: if the student was enrolled by June 30, 2026 and had a Direct Loan or Parent PLUS Loan for that program before the cutoff, the parent keeps the old limit for up to 3 academic years while the student stays at the same school for the same credential.

→ Graduate PLUS is gone for new graduate programs

A graduate student who starts a new program on or after July 1, 2026 cannot borrow Grad PLUS, even with earlier federal loans. The only federal option is the Direct Unsubsidized Loan: $20,500/year and $100,000 aggregate for standard graduate programs, or $50,000/year and $200,000 aggregate in programs ED classifies as professional. Students already enrolled in their program by June 30, 2026 with a Direct Loan for it keep Grad PLUS for up to 3 academic years.

→ RAP is the only income-driven plan after any new loan

Anyone with a Direct Loan first disbursed on or after July 1, 2026, including a consolidation loan, can repay all of their Direct Loans only under RAP or the Tiered Standard Plan. RAP is a flat percentage of full AGI (1% to 10%, rising with income), with a $10/month minimum, a $50/month deduction for each dependent, coverage of any interest a full, on-time payment doesn't cover, and a government principal match of up to $50 a month. Forgiveness comes after 360 qualifying payments over at least 30 years.

→ Workforce Pell extends Pell Grants to short-term job training

Pell Grants can now pay for approved workforce programs of 8–14 weeks and 150–599 clock hours, and bachelor's degree holders can use them (graduate-degree holders can't). Each program needs approval from the state's governor and then the Department of Education, plus 70% completion and 70% job placement rates.

→ $257,500 lifetime federal loan cap

Students now face a $257,500 lifetime maximum on the federal loans they receive for their own education — undergraduate, graduate, and professional, including Grad PLUS and loans from before July 1, 2026. Parent PLUS loans a parent takes out for a child don't count toward it; they're limited separately by the $65,000 per-student Parent PLUS total. Students with the legacy exception aren't subject to it during their window.

→ Family farm and small business assets excluded from SAI

This one started earlier, with the 2026–27 FAFSA: the net worth of a farm the family lives on, a business with 100 or fewer full-time (or full-time-equivalent) employees that the family owns and controls, and a family commercial fishing business is no longer reported as an asset. Business income must still be reported — the exclusion applies to net worth only.

Parents planning a PLUS loan for 2026–27

Check whether your student was enrolled by June 30, 2026 and had a Direct Loan — or you had a Parent PLUS Loan for them — for that program before July 1, 2026. That decides whether you can borrow up to the cost of attendance minus other aid (legacy) or are capped at $20,000/year. Log in at studentaid.gov and review your loan history, then ask the financial aid office for a written legacy determination before you rely on PLUS to close a funding gap.

Graduate students starting this fall

If you're starting a new graduate program this fall, budget around $20,500/year in federal loans ($50,000 for professional programs) — Grad PLUS is not available to you, even if you have earlier federal loans. If you were already in the same program and borrowed for it before July 1, 2026, confirm your legacy status: it preserves Grad PLUS access for up to 3 years, but changing programs or schools voids it.

Current undergrads with existing loans

If you had a Direct Loan for your program before July 1, 2026, your parents may still borrow Parent PLUS under the old rules. Protect that: any break in enrollment — even one term that isn't optional — ends it unless the school records an approved leave of absence, and transferring schools or moving up a degree level ends it too. Your own loan limits haven't changed, unless you drop below full-time.

Borrowers on SAVE, IBR, PAYE, or ICR

If you are on SAVE, act now: you have 90 days from your servicer's notice to choose IBR, RAP, or another plan, or you will be placed in a Standard or Tiered Standard plan. If you are on ICR or PAYE, you have until July 1, 2028. Either way, compare RAP with IBR before you choose. At $30,000 AGI, RAP is about $50/month; at $55,000 it is about $229; at $85,000 about $567 (before dependent deductions).

Anyone eyeing short-term job training, including bachelor's degree holders

There's no separate Workforce Pell application: file the FAFSA, then ask the school's aid office directly whether the program has state and Department of Education approval. Confirm the length (8–14 weeks) and the program's completion and placement rates before enrolling.