Important Updates

Beginning with the 2026-2027 academic aid year, the Student Aid Index asset calculation will exclude the following from the current net worth of business and farms and should not be reported as assets on the Free Application for Federal Student Aid (FAFSA) form:

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

• The foreign earned income exclusion amount reported on the FAFSA will be added to the adjusted gross income when determining Federal Pell Grant eligibility
• Students who receive non-federal grants or scholarships covering the full Cost of Attendance will be ineligible for a Federal Pell Grant
• Students with a Student Aid Index (SAI) equal to or greater than twice the maximum Federal Pell Grant award amount for the award year will be ineligible for the grant
  • For example, if the max Pell amount for 2026–27 is $7,395, and a student has an SAI index of 14,790 or greater, the student will not be eligible for a Federal Pell Grant
  • A limited exception applies for dependents of deceased service members and safety officers

• The bill includes a provision to prorate loan amounts based on enrollment
  • This means that part-time graduate or undergraduate students (e.g., those enrolled in less than 12 aid eligible credit hours) would only be eligible for a portion of the annual loan limit
    • We are awaiting clarification from the Department of Education on the proration calculation

• New Limits for Parent PLUS Loans: New borrowers will have an annual limit of $20,000 and an aggregate limit of $65,000 per dependent student
• Existing Parent PLUS borrowers who have borrowed for their students before July 1, 2026, can continue with the current limits for three more years or until the student’s program ends

• Federal Direct Graduate PLUS Loans will no longer be available to new borrowers
  • There will be some continuing eligibility for existing Grad PLUS borrowers as they complete their current programs

• New amount of up to $20,500/year, $100,000 lifetime borrowing limit
  • Existing Unsubsidized loan borrowers can access unsubsidized loans under the current limits until completing their current program or for three additional years, whichever is less
    • Students will be considered a new borrower if they change majors, take a leave of absence or take more than 3 additional years to complete degree

• For new loans disbursed after July 1, 2026, the bill eliminates current income-driven repayment plans (IBR, PAYE, SAVE) and replaces them with a new Repayment Assistance Program (RAP)
• Students who have borrowed loans before July 1, 2026, and will borrow a new loan after July 1, 2026, are limited to the new RAP or the standard plans for the new loan
• RAP borrowers will not be locked into a 30-year plan. They can switch to a standard plan, which ranges from 10 to 25 years
• Borrowers with no new loans made on or after July 1, 2026, can continue to be eligible to enroll in the current Standard, current Income Based (IBR), Graduated, and Extended repayment plans, and could also opt in to the new RAP. Current borrowers enrolled in ICR, PAYE, or SAVE plans must transition to a new repayment plan by July 1, 2028. If no selection is made by that date, they will be moved into RAP
• More information on the new RAP is forthcoming

For additional resources published by Federal Student Aid (FSA) and national associations, please visit:

• studentaid.gov
• National Association of Student Financial Aid Administrators 
• One Big Beautiful Bill Act Updates (Federal Student Aid) 
• Federal Student Loan Program Provisions Effective Upon Enactment Under the One Big Beautiful Bill Act (GEN-25-04)