On July 4, 2025, President Trump signed into law the “One Big Beautiful Bill Act,” a sweeping budget package that will transform the federal student aid landscape.
Student and Parent Loan Borrowing Limit Changes
The new law introduces several important changes to how students and families finance higher education, effective July 1, 2026.
Current Loan Borrowers
The following legacy provisions apply to current borrowers who take out federal student or parent loans before July 1, 2026.
Undergraduate Students:
- The annual Federal Direct Subsidized and Unsubsidized Student Loan borrowing limits remain unchanged.
- Parent PLUS borrowers will remain eligible to apply through their student’s current program of study to degree completion or three academic years, whichever is shorter. Parent PLUS borrowers will not be subject to the new annual or lifetime maximums by the recent reconciliation bill passage.
Graduate Students:
- The annual Federal Direct Unsubsidized Student Loan borrowing limit remains unchanged at $20,500.
- Graduate PLUS borrowers will remain eligible to apply through their current program of study to degree completion or three academic years, whichever is shorter.
Undergraduate or Graduate Students:
- Federal Direct Subsidized and/or Unsubsidized Student Loan borrowers’ lifetime maximum of $138,500 (includes undergraduate and graduate student loan borrowing) remains unchanged.
New Loan Borrowers
The following provisions apply to new borrowers who take out federal student or parent loans as of July 1, 2026.
Undergraduate Students:
- The annual Federal Direct Subsidized and Unsubsidized Student Loan borrowing limits remain unchanged.
- Parent PLUS Loan borrowers will be subject to new borrowing limits. All parents of undergraduate students combined will be eligible to apply up to $20,000 per academic year per student, with a lifetime maximum of $65,000 per student.
Graduate Students:
- The Federal Direct Unsubsidized Student Loan will see some changes. While the annual Unsubsidized Loan borrowing limit remains unchanged at $20,500, a new lifetime borrowing maximum of $100,000 will be introduced for new borrowers. Student borrowers pursuing a law or medical degree will be able to borrow the Unsubsidized Loan up to $50,000 per academic year, with a lifetime borrowing maximum of $200,000 for those pursuing these degrees.
- Graduate student loan borrowers will also see significant changes. One of the most notable adjustments is the discontinuation of the Graduate Student PLUS Loan program, which will no longer be available as a borrowing option.
Undergraduate or Graduate Students:
- All new federal student loan borrowers will have a lifetime borrowing maximum on all federal student loans of $257,500, excluding borrowed Parent PLUS Loan amounts.
Federal Loan Repayment Changes
The new law also introduces several important changes to student and parent loan repayment. Additional information will be shared once the Department of Education releases further clarification.
LMU’s Response
LMU Financial Aid is committed to helping students and families navigate these changes while also staying informed of policy updates to ensure students receive the most accurate and timely guidance. As the Department of Education releases additional implementation guidelines and in the coming weeks, LMU will continue to monitor developments closely and share timely updates with the campus community.