Federal Student Loan Changes

What current and future students and families need to know about federal aid changes taking effect on July 1, 2026.

Timeline • Legacy Provisions • FAQs • Glossary

Key Highlights

  • Parent PLUS and Graduate PLUS loan rules will change beginning July 1, 2026
  • Students already enrolled may qualify for legacy borrowing
  • Borrowing limits may apply for new students starting Summer/Fall 2026
  • The U.S. Department of Education is still finalizing guidance

Pause & Read

As of October 15, 2025, The U.S. Department of Education (ED) is in negotiated rulemaking sessions that Nazareth's office of Financial Aid is continually monitoring. The Department of Education has not yet finalized or released critical details regarding the One Big Beautiful Bill Act(OBBBA) to universities or financial aid offices. In other words, this information is subject to change. We will update this webpage as soon as the information becomes available.

Timeline

Through Spring 2026

  • No changes to:
    • Federal Direct Parent PLUS Loans
    • Federal Direct Graduate PLUS Loans
    • Federal Direct Subsidized & Unsubsidized aggregate loan limits

Beginning July 1, 2026

Students entering college beginning Summer 2026 term or after, or changing academic programs after July 1, 2026:

  • The OBBB Act has eliminated the Federal Direct Graduate PLUS Loan program for students starting a new graduate/professional program beginning Summer 2026.
  • Loan limits may be prorated for part-time enrollment
  • Federal Unsubsidized Loans for graduate students
    • $20,500 annual limit
    • $100,000 lifetime aggregate limit
  • Federal Direct Parent PLUS Loan will have new borrowing limits:
    • $20,000 per student per year 
    • $65,000 lifetime aggregate limit per dependent student
Who is affected?

The impact of these changes depends on when you begin your program and whether you borrowed federal loans before July 1, 2026.

What remains unclear

The U.S Department of Education has not yet released final guidance on: 

  • How dual-degree programs will be treated
  • How loan proration will apply for part-time students 

Legacy Provisions

What does "Legacy Status" mean? A legacy provision allows certain students or parents to continue borrowing under current loan rules, even after new rules take effect.

Legacy Eligibility
Parent PLUS Loan Borrowers

A parent may qualify for the legacy provision if all are true:

  • The student was enrolled in a program of study before July 1, 2026.
  • A federal student loan was disbursed for that program of study before July 1, 2026.

If eligible, a parent may continue borrowing for:

  • Up to three academic years, or
  • The remainder of the students current program; whichever is less.

Important:

  • If the student ceases enrollment or withdraws from the university, the legacy status no longer applies, and the new rules take effect immediately.
  • Legacy status is student-specific. It does not apply to other dependent students unless they were also enrolled in a program of study and a loan was received on their behalf as of June 30, 2026.

Legacy Eligibility
Graduate PLUS Loan Borrowers

A graduate level student may qualify for the legacy provision if all are true:

  • They were enrolled in the same credentialed program before July 1, 2026.
  • They had a federal student loan was disbursed for that program before July 1, 2026.

Legacy borrowing is allowed for:

  • Three academic years; or
  • the remainder of their current program; whichever is less. 

Changing programs or institutions ends legacy eligibility.

Legacy Eligibility
Program of Study Changes

Undergraduate Programs
  • Legacy status follows degree level
  • If a student enrolled in a bachelor's program at Nazareth University before Summer 2026, legacy status may be maintained, even if you change majors.
  • Transferring institutions ends legacy status. The same is true for a student transferring in from a school where they had legacy provisions.
Graduate Programs
  • Legacy status is tied to the specific academic program (see example below)
  • Changing programs, even within the same university, ends eligibility
  • Transferring institutions ends eligibility 
Example

A student enrolled in an MSW program at Nazareth University before July 1, 2026 and may maintain legacy status if they remain in the MSW program.

However, if that student later changes their program to an M.S. in Human Resource Leadership, or the student transfers from Nazareth University to another university's MSW program, they will not maintain legacy status.

FAQs

Will my financial aid change for Fall 2025 or Spring 2026?

No. There are no changes to federal student loans for Fall 2025 or Spring 2026 terms.

When do the new loan rules start?

The new federal student loan rules take effect on July 1, 2026.

What is changing in 2026?

Beginning July 1, 2026:

  • Graduate PLUS Loans will no longer be available for new graduate or professional students
  • Parent PLUS Loans will have new borrowing limits:
    • $20,000 per student per year
    • $65,000 lifetime limit per dependent student
What if my parent already borrowed a Parent PLUS Loan?

Your parent may qualify for legacy (grandfathered) borrowing if:

  • You were enrolled before July 1, 2026, and
  • a federal loan was disbursed before that date

If eligible, your parent may continue borrowing for:

  • Up to three academic years. or
  • The remainder of your current program (whichever is shorter)
What does "legacy" or "grandfathered" status mean?

Legacy status allows certain students or parents to continue borrowing federal loans under current rules, even after new limits take effect. For a certain period of time.

Will I keep legacy status if I change my major?

Undergraduate students: Yes, as long as you remain in the same degree program

Graduate students: No, legacy status is tied to the specific graduate program

What if I transfer to another school?

Legacy eligibility does not transfer to another institution. New loan limits apply at your new school. 

What happens if I withdraw or stop enrollment?

Legacy status ends immediately if a student withdraws or stops enrollment.

Does this affect part-time students?

Possibly. The law includes provisions to prorate loan amounts for part-time enrollment, but final details are still pending from the U.S. Department of Education.

What if I'm starting University or a new program in Summer or Fall 2026?

If you begin with Summer 2026 term or after:

  • Graduate PLUS Loans will not be available
  • Parent PLUS Loans will be subject to new annual and lifetime limits
Who can I contact if I'm not sure how this applies to me?

Contact the Financial Aid Office. We can review your situation and help you understand how these changes may affect you.

Glossary

Aggregate: The maximum amount of a loan that can be borrowed during a specific academic career or period of time.

Legacy: A legacy provision in federal student aid refers to rules that allow students or parents with specific eligibility to continue receiving aid or borrowing federal loans under older criteria, even is the criteria has since changed.

Subsidized Loan: A type of loan where the government pays the interest on the loan while the borrower is in school at least half-time, during a grace period, and during periods of deferment.

Unsubsidized Loan: A type of loan where the interest is accruing during the period of enrollment, during the grace period, and during deferment. 

Parent PLUS Loan: A federal loan that the parent(s) of a dependent undergraduate student can borrow to help pay for their child's education. It is a credit-based loan, not based on the student's or family's financial need. Parents can borrow up to the cost of attendance, minus any other aid the student is receiving. 

Dependent Student: A dependent student is someone whose parent(s) information required on the FAFSA based on the dependency status questions asked on the FAFSA.

Questions?

If you have questions about how these changes may affect your financial aid, please contact the Financial Aid Office. We are here to help.