Federal Aid Changes

Graduate PLUS Loan Changes

The Grad PLUS Loan program is no longer available to most new graduate and professional student borrowers beginning July 1, 2026. Limited exceptions may apply for certain continuing borrowers who meet federal requirements.

Graduate students will still be able to borrow Direct Unsubsidized Loans, subject to updated federal borrowing limits.

Parent PLUS Loan Changes

Parent PLUS Loans will continue to be available to help families pay for undergraduate education, but new annual and lifetime borrowing limits apply.

• $20,000 per year per student
• $65,000 lifetime borrowing limit per student

Federal Student Loan Lifetime Limit

The new legislation establishes a lifetime federal borrowing limit of $257,500 across most federal student loan programs.

These changes primarily affect loans borrowed beginning July 1, 2026, although some continuing borrowers may qualify for limited exceptions.

The 2026–27 FAFSA includes updated rules affecting Pell Grant eligibility.

Key updates include:

• Students with a Student Aid Index (SAI) greater than twice the maximum Pell Grant amount may no longer qualify for a Pell Grant.
• Students whose total financial aid already covers the full Cost of Attendance may not be eligible for a Pell Grant.

These updates may affect some students' federal financial aid eligibility depending on their FAFSA results.

Beginning with the 2026–27 FAFSA, some financial information used to determine federal financial aid eligibility has changed.

Updates include:

• Additional types of income may be considered when calculating federal aid eligibility.
• Foreign income may be included in certain cases when determining Pell Grant eligibility.
• Asset exemptions for family farms and small businesses have been reinstated.

These FAFSA changes are intended to update how federal aid eligibility is calculated for families.

Full-time academic year definition
To be considered full-time for the academic year:

• Undergraduate students must take 24 credit hours over the course of the fall and spring terms.
• Graduate students must take 24 credit hours over the course of the fall, spring and summer terms

Half-time enrollment
Students must be enrolled at least half-time in financial aid-eligible classes to receive a Federal Direct Loan in any given semester. The minimum number of credits per semester to be considered half-time is:

• Undergraduates: 6 credit hours
• Graduate Semester: 6 credit hours

Loan amount: A student can receive the full annual Federal Direct Loan amount as long as their financial aid eligibility allows them to do so.

Award calculation: 

Cost of attendance (COA) - Gift Aid (grants/scholarships) - Federal Work Study = Remaining Loan Eligibility

EXAMPLE: Undergraduate student award offer (current rule calculation)

• Full-time Cost of Attendance (COA): $40,000
• Grants: $7395
• Scholarships: $10,000
• Federal Work Study: $2,000
• Remaining Eligibility: $20,605

This student has $20,605 of eligibility remaining before reaching the full Cost of Attendance.

Congress set the maximum annual Federal Direct Loan limit based on a student’s grade level.

For this example, the student is a Dependent Freshman with a maximum annual limit of $5,500. Since the student has $20,605 in remaining eligibility, they can receive the full $5,500 in a Direct Loan. Factors such as the Student Aid Index (SAI) will determine how much of the loan is subsidized versus unsubsidized, but the overall amount is capped at $5,500 per year.

If the student dropped from a full-time (12+ credit hours) load of financial aid eligible classes in the fall to three-quarter time (9-11 credit hours), the student could still keep the entire $5,500 as long as the adjusted COA would leave enough remaining eligibility to do so. In most cases, it would.

Full-time academic year definition (No change from the current rules)
To be considered full-time for the academic year:

• Undergraduate students must take 24 credit hours over the course of the fall and spring terms.
• Graduate Semester students must take 24 credit hours over the course of the fall, spring and summer terms.

Half-time enrollment (No change from the current rules)
Students must be enrolled for at least a half-time load of financial aid-eligible classes to receive a Federal Direct Loan in any given semester/quarter. The minimum number of credits per semester to be considered half-time is:

• Undergraduates:  6 credit hours
• Graduate Semester: 6 credit hours

Less than full-time enrollment
Starting with the 2026–27 award year, which begins with the Fall 2026 semester/quarter for most programs, Direct Loan amounts for students who are not full-time for the full academic year will need to be adjusted. This is called a Schedule of Reduction, or SOR change. Information provided by the U.S. Department of Education (ED) indicates that less than full-time enrollment in one semester may affect loan eligibility in another, rather than just the semester in which it occurred, but the examples released by ED are not comprehensive enough to fully outline how this will work in every enrollment scenario.

Award calculation:
Cost of attendance (COA) - Gift Aid (grants/scholarships) - Federal Work Study = Remaining Loan Eligibility 

From here, multiply the less-than-full-time percentage (see below for this calculation) by the full-time annual loan eligibility to determine the less-than-full-time loan amount.

Less than full-time formula for loan eligibility:
(Number of credit hours enrolled for the academic year
÷ number of credit hours considered full time for that academic year and for that program) x 100 = Reduced annual loan limit percentage
 
This adjustment rule applies to all undergraduate, graduate, and professional student Direct Loan borrowers, utilizing Direct Subsidized Loans, Direct Unsubsidized Loans, and/or Graduate PLUS Loans. Even those considered legacy borrowers who have borrowed from any of these loan programs prior to July 1, 2026, are subject to this rule. 

Because this rule only impacts student borrowing, the Federal Direct Parent PLUS Loan is not subject to these adjustments for less-than-full-time study.

EXAMPLE: Undergraduate student award offer (new rule calculation)

Let’s say you’re a Dependent Freshman who can borrow up to $5,500 in student loans for the school year. You plan to take 12 credit hours in the fall and 12 credit hours in the spring, which makes you a full time student (full time = at least 12 credits each semester).

That means:

• Full-time for the year = 24 credits (12 fall + 12 spring)
• Your loan normally comes in two equal payments:
  • Fall: $2,750
  • Spring: $2,750

What happens when you drop a class
If you drop from 12 credits to 9 credits in the fall AFTER your loan is already disbursed the fall loan does not have to be reduced.

Before giving you the spring portion of the loan, UHC must verify how many credits you are actually going to finish for the combined fall and spring terms.

Your new plan for the year

• Fall: 9 credits
• Spring (expected): 12 credits
• Total: 21 credits

Originally, full time for the year was 24 credits, but now you’ll only have 21 credits.

Percentage of full-time you’re completing
(21 ÷ 24) x 100 = 87.5%

This means you are scheduled to complete 87.5% of the credits needed to be considered full time for the combined fall and spring terms.

How this affects your loan
Because you’re only completing 87.5% of the needed credits, you can only receive 87.5% of your $5,500 loan limit:

$5,500 x 0.875 = $4,813 (rounded)

You already received $2,750 in the fall.

So for spring, you can only receive:

$4,813 – $2,750 = $2,063

Even if you take 12 credits in the spring, your spring loan is limited to $2,063 because your total enrollment for the year dropped.

How you could still get the full spring loan
If you take 15 credits in the spring, then your total for the year becomes:

• Fall: 9 credits
• Spring: 15 credits
• Total: 24 credits

Now you’re back to completing a full time year.

That means you can get the full $2,750 for spring.

EXAMPLE: Graduate semester student award offer

Let’s say you’re a Graduate student in the Master of Counseling who can borrow up to $20,500 in student loans for the school year. You plan to take 6 credit hours in the fall, 6 credit hours in the spring, and 6 credit hours in the summer which makes you a less than full time student (full time = at least 9 credits each semester).

Percentage of full-time you’re completing

(18 ÷ 24) x 100 = 75%

This means you are scheduled to complete 75% of the credits needed to be considered full time for the combined fall and spring terms.

How this affects your loan
Because you’re only completing 75% of the needed credits, you can only receive 75% of your $20,500 loan limit:

$20,500 x 0.75 = $15,375

You would receive your loan amount in three payments:

• Fall: $5,125
• Spring: $5,125
• Summer: $5,122

How you could still get the full spring loan
If you take 12 credits in the spring, then your total for the year becomes:

• Fall: 6 credits
• Spring: 12 credits
• Summer: 6 credits
• Total: 24 credits

Now you’re back to completing a full time year.

That means you can get the full $6,833 for spring.

Yes. Federal financial aid programs such as Pell Grants and federal student loans will still be available to eligible students. The law changes how some programs operate, but federal financial aid has not been eliminated.

Many changes from the One Big Beautiful Bill Act took effect July 1, 2026, beginning with the 2026–27 award year.

Yes. The 2026–27 FAFSA includes updates to how certain financial information is considered when determining federal financial aid eligibility, including Pell Grant eligibility.

No. Pell Grants will continue to be available to eligible students. However, updated eligibility rules may affect which students qualify and how much aid they receive.

Yes. Parent PLUS Loans continue to be available to eligible parents of undergraduate students, but new annual and lifetime borrowing limits apply beginning in 2026.

A Schedule of Reduction, or SOR, is a federal rule that may reduce a student's annual Direct Loan eligibility when the student is scheduled to complete less than a full-time academic year.

Not necessarily. The impact depends on when the enrollment change occurs and the student's enrollment for the academic year. A change in enrollment may affect future loan disbursements even when a previous disbursement has already been made.

Contact the UHC Office of Financial Aid before changing your enrollment if you have questions about your loan eligibility.

No. The Schedule of Reduction applies to student Direct Loan borrowing. Parent PLUS Loans are not subject to the less-than-full-time SOR adjustment.

Students who qualify for certain federal continuing-borrower exceptions may still be subject to the Schedule of Reduction for 2026–27 and later award years. The SOR calculation is separate from the rules that determine whether a borrower qualifies for an exception to certain new loan limits.

Absolutely. Completing the Free Application for Federal Student Aid (FAFSA) is the best way to determine what federal, state, and institutional aid you may qualify for.