Student Financial Services

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. 

 

Undergraduate Direct Student Loans

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

Borrowing limits 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 dependent student is enrolled in a program of study and has borrowed a Direct Loan before July 1, 2026 or a parent has borrowed a PLUS Loan for that student before July 1, 2026, the parent is exempt from the PLUS aggregate limit and can continue to borrow up to the student's cost of attendance for three academic years or the remainder of the dependent student’s expected time to credential, whichever is less.

Direct Graduate PLUS Loan

Under the OBBBA the Graduate PLUS loan program will be eliminated, effective July 1, 2026.

Legacy Provision: If a graduate student has received a Direct Loan made before July 1, 2026 while enrolled in a credentialed program, the borrower can continue to borrow from the Grad PLUS Loan program for three academic years or the remainder of their expected time to credential, whichever is less.

Graduate/Professional Annual & Aggregate Loan Limits

Annual loan limits will be capped 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, in addition to the amount borrowed for undergraduate education. (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.

Annual Loan Limits for Part-Time Students

Beginning in 2026-27, the OBBBA reduces the amount of a loan that a student may borrow for an academic year if the student is enrolled in a program of study on less than a full-time basis during that academic year. This reduction in the annual loan limit will be made in direct proportion to the degree to which the student is not enrolled full-time, rounded to the nearest percentage point.

Full Cost of Attendance (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

Beginning with the 2026-27 award year, the foreign earned income exclusion amount reported on the FAFSA form will be added to the adjusted gross income (AGI) when determining Pell Grant eligibility.

Students with High SAIs

Beginning with the 2026-27 award year, an applicant with an SAI equal to or greater than twice the maximum Pell Grant award amount for the award year is ineligible for a Pell Grant.

  • For the 2026–27 award year, this threshold is $14,790.
  • This limit does not apply to students who qualify for a Pell Grant under the Special Rule (dependents of certain deceased servicemembers and Public Safety Officers).

Repayment Plan/New Borrowers

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 (RAP). 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.

Once all current borrowers transition out of the existing Income-Driven Repayment (IDR) or standard plans, these plans will be discontinued.

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 (IBR) plans; they may also opt in to the new Repayment Assistance Plan (RAP).

Current borrowers enrolled in Income-Contingent Repayment (ICR), Pay As Your Earn (PAYE), or Saving on a Valuable Education (SAVE) plans must transition to a different repayment plan (current IBR, current standard plan, or RAP) by July 1, 2028. If no selection is made by that date, they will be moved into the RAP plan automatically.

Repayment Assistance Plan (RAP)

Under the OBBBA, a new income-based repayment plan called the Repayment Assistance Plan (RAP) will be created, effective July 1, 2026. Key features of the new plan include the following:

  • If married filing separately, the spouse’s AGI and number of dependents are not included in the payment calculation.
  • The monthly payment is 1-10% of income based on AGI.
  • A $10 minimum payment is required.
  • $50 off monthly payment (base payment) per dependent.
  • 30-year repayment period.
  • Eliminates negative amortization, meaning no interest will accrue beyond the amount of the loan balance, even if the monthly payment is insufficient to cover the interest.
  • There is no cap on the monthly payment, even if it exceeds the amount under the standard repayment plan.
  • If a borrower makes an on-time payment that reduces their principal by less than $50, the Department of Education will cover the difference, up to the amount paid.

Income-Based Repayment (IBR) Plan

Effective July 1, 2026, the requirement for borrowers to demonstrate a partial financial hardship will be removed. Cancellation for balances of loans repaid under IBR at 25 years will be retained.

Standard Repayment Plan

A new standard plan with four fixed terms of 10, 15, 20, or 25 years based on the amount borrowed (or outstanding balance if in repayment) will be created, 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 Income-Driven Repayment (IDR) plan between July 1, 2026, and June 30, 2028 will 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 took out Parent PLUS loans before July 1, 2026, and borrow again on or after that date, all loans must be repaid under the same repayment plan. The only eligible plan for Parent PLUS borrowers will be the standard repayment plan.

Loan Rehabilitation Terms

Borrowers can rehabilitate a defaulted loan twice, instead of once as currently allowed, effective July 1, 2027.

Loan Deferment Options

Effective July 1, 2027, the economic hardship and unemployment deferments will be discontinued. Borrowers with loans made on or before July 1, 2027 are still able to use these deferment options under the current rules. Once all borrowers' loans made prior to July 1, 2027 are paid in full, these options will cease to exist.

Loan Forbearance

Loans made on or after July 1, 2027 are eligible for forbearance for up to nine months in any two-year period. Current rules allow for a forbearance up to 12 months at a time, with a cumulative limit of three years.

FAFSA Asset Exemption

Beginning with the 2026–27 award year, the Student Aid Index (SAI) asset calculation will exclude the following from current net worth of business and farms and should not be reported as assets on the FAFSA form:

  • The net worth of a family-owned business with 100 or fewer full-time (or full-time equivalent) employees.
  • The net worth of a farms on which the family resides.
  • The net worth of a commercial fishing business and related expenses, owned and controlled by a family.