Federal Loan Updates for 2026-2027

Federal Student Loan changes for 2026–27

Big changes are coming to federal student loans starting July 1, 2026, because of new legislation called the One Big Beautiful Bill (OB3) Act.

These updates especially affect graduate students and parents who use Parent PLUS Loans.  If you plan to use federal loans in 2026–27 or later, here’s what you need to know.

For Graduate students

Grad PLUS Loans are going away

• Starting July 1, 2026, new students will no longer be able to take out Graduate PLUS Loans.
• This means you won’t be able to use federal loans to cover your full Cost of Attendance (COA) unless you qualify for the Legacy Provision (explained below).

New limits on Unsubsidized Loans

Loans now have different limits depending on your program level:

Graduate students (Master’s, PhD, etc.)

• Annual limit: $20,500 (same as now)
• Lifetime limit: $100,000 (includes undergrad loans)

Professional students (Medical, Dental, Law, Pharmacy, etc.)

• Annual limit: $50,000
• Lifetime limit: $200,000 (includes undergrad loans)

Note: TWU’s graduate programs fall under the “Graduate” category, not “Professional.”

Legacy Provision (grandfathering)

You can keep borrowing under the current rules (including Grad PLUS) for up to 3 more years if BOTH are true:

• You are in the same degree program in 2026–27 that you were in before July 1, 2026.
• You borrowed any federal student loan (Subsidized, Unsubsidized, or Grad PLUS) for that program before July 1, 2026.

If you switch programs after that date, you lose grandfathered status.  

For parents of Undergraduate students

New limits on Parent PLUS Loans

Beginning in 2026–27, Parent PLUS Loans will have fixed borrowing caps:

• Annual limit: $20,000 per student
• Lifetime limit: $65,000 per student

Currently parents can borrow up to the full Cost of Attendance, so this is a major change.
 
Families who need more than $20,000 per year may need to look at private loans or payment plans.

Legacy Provision for parents

Parents can continue borrowing under the current rules for up to 3 more years if:

• The student stays in the same program they were enrolled in before July 1, 2026, and
• The parent borrowed a Parent PLUS Loan for that student before July 1, 2026.

New overall Lifetime Loan Cap

There is now a $257,500 total lifetime borrowing limit for all federal loans combined.

This includes:

• Subsidized
• Unsubsidized
• Grad PLUS

Parent PLUS Loans do not count toward this cap.

How to get ready

Here are a few steps to stay informed and prepared:

• Check your current loans
  • Log in to StudentAid.gov to see your total balance.
• See if you qualify for the Legacy Provision
  • If you’re already enrolled and have borrowed federal loans, you likely do.
• Plan ahead for possible funding gaps
  • If your costs may exceed the new limits, start researching private loans, payment plans, or savings options now.

TWU Financial Aid & Scholarships will keep updating this information as the Department of Education releases final details.

Page last updated 4:47 PM, December 11, 2025