Federal financial aid changes taking effect in 2026

The U.S. federal student aid system will see sweeping changes under the One Big Beautiful Bill Act (OBBA), signed by the Trump administration on July 4, 2025. Effective July 1, 2026, Pell Grants will no longer cover students whose institutional, state, or private aid meets or exceeds full cost of attendance, impacting full-ride scholarship recipients like student-athletes. Foreign income will now automatically factor into adjusted gross income (AGI) for eligibility calculations, while Pell eligibility expands to optional workforce programs, including short-term career-focused training. Federal Direct Loan Program reforms eliminate Grad PLUS loans, replacing them with unsubsidized Federal Direct Stafford loans. Graduate students now face annual limits of $20,500 and aggregate caps of $100,000, while professional students are capped at $50,000 annually and $200,000 total. Parent PLUS loans for undergraduates are also restricted to $20,000 per year per dependent student, with a $65,000 aggregate limit. A new lifetime federal loan cap of $257,500 applies across all education levels. The National Association of Student Financial Aid Administrators (NASFAA) warns these changes will disproportionately affect low- and middle-income students, particularly those relying on Grad PLUS loans for graduate studies. UCI Associated Students President Alondra Arevalo expressed concern that stricter loan caps may force part-time students to leave school or delay post-graduate enrollment. Repayment options will simplify to two plans: the Repayment Assistance Plan (RAP), requiring a $10 minimum monthly payment, and the Tiered Standard Repayment Plan. Pell Grant maximum awards remain unchanged at $7,395 for 2026-2027, though eligibility criteria have tightened significantly. The reforms aim to streamline aid but risk limiting access for non-traditional and low-income students.