What the One Big Beautiful Bill Act (OBBBA) Means for Your Federal Student Loans

The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, and introduces major changes to federal student aid, with most student loan provisions taking effect July 1, 2026.

Key changes to federal student loans for undergraduate students:

1. Direct Subsidized and Unsubsidized Loans remain available
   •  Undergraduate students will still be eligible for Federal Direct Subsidized and Unsubsidized Loans.
2. Annual and aggregate loan limits remain unchanged
   • Dependent undergraduate students: $31,000 total lifetime aggregate limit (no more than $23,000 in subsidized loans)
   • Independent undergraduate students: $57,500 total lifetime aggregate limit (no more than $23,000 in subsidized loans)
3. Parent PLUS Loan limits are reduced
   • Beginning July 1, 2026, new Parent PLUS borrowing is capped at:
     • $20,000 per year per dependent student
     • $65,000 lifetime per student
   • Previously, parents could borrow up to the full cost of attendance.
4. Loan Proration / SOR (Schedule of Reductions) refers to a new federal student loan rule under the One Big Beautiful Bill Act (OBBBA) that affects Federal Direct Subsidized and Unsubsidized Loans for undergraduate students beginning July 1, 2026.
   
   What is SOR?

   Under Schedule of Reductions (SOR), a student’s annual federal loan eligibility will be prorated (reduced) based on actual enrollment intensity (number of credits enrolled/academically engaged), similar to how Pell Grants are adjusted.

   Example (Undergraduate):

   If a dependent first-year student is eligible for $1,750 subsidized loan for a semester:

   1. Full-time (12+ credits) = 100% = $1,750
   2. 9 credits = 75% = $1,312
   3. 6 credits = 50% = $875
   4. Less than half-time = not eligible = $0

For more information on the One Big Beautiful Bill Act (OBBBA) and how these changes may impact your financial aid, please visit https://studentaid.gov/announcements-events/big-updates.