Federal Updates
One Big Beautiful Bill Act (OBBBA)
On July 4, 2025, the One Big Beautiful Bill Act was signed into law, introducing significant changes to federal student aid programs. While some of these changes went into effect immediately, many of the changes will be implemented on July 1, 2026 and over the subsequent years.
Xavier University’s Office of Student Financial Services is here to help you understand how these updates may affect your financial aid—now and in the future. Read on to learn what’s changing and what it means for you.
Federal Loan Programs
Undergraduate Direct Student Loan Program
Borrowers of the undergraduate subsidized and unsubsidized loans will not see any changes to eligibility or lifetime loan limits under the OBBBA.
Direct Parent PLUS Loan Program
Borrowing caps have been instituted for the Parent PLUS loan, effective July 1, 2026. Parents of dependent undergraduate students may borrow $20,000 per year per dependent student, with a $65,000 aggregate limit per dependent student (without regard to amounts forgiven, repaid, canceled, or discharged).
Legacy Provision: If a Parent PLUS borrower has received a loan made before July 1, 2026, while the dependent student is enrolled in a credentialed program, the parent can continue to borrow under current loan limits for three academic years or the remainder of their dependent student’s expected time to credential, whichever is less.
Direct Graduate PLUS Loan Program
Under the OBBB the Graduate PLUS loan program will be eliminated, effective July 1, 2026.
Legacy Provision: If a borrower received a Direct Loan made before July 1, 2026, while enrolled in a credentialed program, the borrower can continue to borrow from the program for three academic years or the remainder of their expected time to credential, whichever is less, in that same program.
Graduate/Professional Annual & Aggregate Loan Limits
Caps the annual loan limits at $20,500 for graduate students and $50,000 for professional students*, effective July 1, 2026. The aggregate limit is capped at $100,000 for graduate students and $200,000 for professional students, and does not include amounts borrowed as an undergraduate. (Borrowers who are both graduate and professional students at some point in their educational careers may only borrow up to $200,000 in total for graduate and professional school.)
Legacy Provision: If a borrower has received a Direct Unsubsidized Loan made before July 1, 2026, while enrolled in a credentialed program, the borrower can continue to borrow under current loan limits for three academic years or the remainder of their expected time to credential, whichever is less.
Federal Loan Program Lifetime Loan Limits
Effective July 1, 2026, there will be a $257,500 lifetime borrowing limit on all federal student loans, excluding borrowed Parent PLUS loan amounts (in the case of a dependent student who had Parent PLUS borrowed on their behalf for education expenses).
Legacy Provision: If a borrower has a Federal Direct Loan made before July 1, 2026, while enrolled in a credentialed program, the borrower can continue to borrow under current loan limits for three academic years or the remainder of their expected time to credential, whichever is less.
Pell Grant Program
Full COA Scholarships/Grants
Effective July 1, 2026, students who receive grants or scholarships from non-federal sources covering their entire cost of attendance (COA) are ineligible to receive a Pell Grant, even if otherwise eligible for the program.
Foreign Income and Pell Eligibility
Foreign income is required to be included in the AGI used to calculate Pell Grant eligibility, starting with award year 2026-27.
Students with High SAI
Prevents students from receiving Pell Grants if their SAI exceeds twice the amount of the maximum Pell Grant award, effective July 1, 2026.
Loan Repayment
Repayment Plan/New Borrowers
Borrowers with new loans made on or after July 1, 2026 can be repaid using only two plans: a new standard repayment plan and the new income-based Repayment Assistance Plan. If a borrower with new loans made on or after July 1, 2026 does not select a plan, they will be assigned to the new standard repayment plan.
All loans must be paid under the same repayment plan, so borrowers with loans made before July 1, 2026, who take out additional loans on or after July 1, 2026, will only have the Repayment Assistance Plan (RAP) and the new standard repayment plan as options.
After all current borrowers move out of all other current Income-Driven Repayment (IDR) or standard plans, they will be sunset.
Repayment Plan/Current Borrowers
Current borrowers with no new loans made on or after July 1, 2026 are eligible to enroll in the current Standard, Graduated, Extended, or current Income-Based repayment plans; they may also opt in to the new Repayment Assistance Plan.
Current borrowers enrolled in ICR, PAYE, or SAVE plans must transition to a different repayment plan (current IBR, current standard plans, or RAP) by July 1, 2028. If no selection is made by that date, they will be moved into RAP automatically.
Repayment Assistance Plan (RAP)
Creation of new income-based repayment plan called the Repayment Assistance Plan (RAP), effective July 1, 2026. If married filing separately, spouse’s AGI and number of dependents are not included in the payment calculation. $10 minimum payment. Monthly payment is 1-10% of income based on AGI. $50 off monthly payment (base payment) per dependent. 30-year repayment period. Eliminates negative amortization. No cap on monthly payment, even if it’s higher than the standard repayment plan would be. If a borrower makes an on-time payment that reduces their principal by less than $50, ED will cover the difference, up to the amount paid.
Income-Based Repayment (IBR) Plan
Effective July 1, 2026, removes the requirement for borrowers to demonstrate a partial financial hardship. Retains cancellation for balances of loans repaid under IBR at 25 years.
Standard Repayment Plan
Creation of a new standard plan with 4 fixed terms of 10, 15, 20, or 25 years based on the amount borrowed (or outstanding balance if in repayment), effective July 1, 2026.
Repayment Options for Parent PLUS & Consolidation Loans
Certain consolidation loans made on or after July 1, 2026, are only eligible for the RAP or standard repayment plans.
A consolidation loan repaid using an IDR plan between July 1, 2026, and June 30, 2028 would not be eligible for RAP and must be repaid under the standard plan. A consolidation loan used to pay off a Parent PLUS is not eligible for RAP and must be repaid under the standard plan.
All new Parent PLUS loans from the effective date on must be repaid under the standard repayment plan, they are not eligible for RAP. If a borrower chooses RAP, but has a loan that is not eligible for RAP (like Parent PLUS and certain consolidated loans) they must repay the ineligible loan/s separately.
For borrowers who had borrowed Parent PLUS before July 1, 2026, and subsequently borrowed from the program on or after July 1, 2026, repayment for all loans must be under the same repayment plan, of which the only eligible plan for Parent PLUS borrowers is the standard plan.
Loan Rehabilitation Terms
Borrowers can rehabilitate a defaulted loan twice, instead of once as currently allowed, effective July 1, 2027.
Loan Deferment Options
Sunsets the economic hardship and unemployment deferments, effective July 1, 2027.
Loan Forbearance
Loans made on or after July 1, 2027, are eligible for forbearance for up to nine months in any two-year period.
FAFSA Need Analysis
FAFSA Asset Exemption
Reinstates the exemptions of family farm and a family-owned small business assets from the SAI calculation and expands asset exemptions to family-owned commercial fisheries starting with the 2026-27 award year.