Federal Update: Impact of the One Big Beautiful Bill Act on Financial Aid

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (OBBBA), a federal budget reconciliation package that includes several significant changes to federal student aid. The information below is a summary of the changes especially relevant to Richmond students and families. The full text of the OBBBA can be found by clicking the button on the right sidebar. We will update this page as more information and guidance is made available from the U.S. Department of Education.

The following changes are effective as of July 1, 2026, for families filling out the 2026-2027 Free Application for Federal Student Aid (FAFSA).
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  • FAFSA Asset Exemptions
    • The net worth of farms, small businesses, and commercial fisheries owned by a family will be exempt from the Student Aid Index (SAI) calculation and should not be included when reporting assets on the 2026-27 FAFSA.
  • Pell Grants
    • Foreign income will be included in the Adjusted Gross Income (AGI) used to calculate Pell Grant eligibility.
    • Students with SAIs greater than twice the maximum Pell Grant amount ($14,790 for the 2026-27 aid year) will be ineligible for a Pell Grant. This does not apply to children of fallen heroes/servicemen who died in the line of duty. 
    • Students who receive grants/scholarships from non-federal sources up to the full Cost of Attendance (COA) of their program will not be eligible to receive a Pell Grant.
  • Federal Direct Loan Limits

    The bill includes legacy provisions for current federal direct loan borrowers to continue under their current annual and aggregate loan limits for up to three years or the completion of the eligible academic program, whichever period is shorter.

    Undergraduate Students

    Graduate and Professional Students

    • Graduate PLUS Loans will be eliminated as a borrowing option except for legacy borrowers.
    • Direct Unsubsidized Loans annual and aggregate borrowing limits will change.
      • Graduate students, such as those pursuing an M.A., will remain eligible to borrow up to $20,500 per year, with a new aggregate limit of $100,000 (excluding amounts borrowed as an undergraduate).
      • Professional students, such as those pursuing a J.D., will be eligible to borrow up to $50,000 per year, with an aggregate limit of $200,000 (excluding amounts borrowed as an undergraduate).

    All Students

    • Annual loan limits will be prorated based on enrollment status.
    • The lifetime borrowing limit on all federal student loans received as an undergraduate and graduate student, excluding Parent PLUS Loans, will be $257,500.

    Parents of Undergraduate Students

    • Parent PLUS loans will be capped at $20,000 per year, with an aggregate limit of $65,000, per dependent student.
  • Federal Direct Loan Repayment

    Borrowers currently in federal loan repayment should contact their loan servicer to discuss the impact of these changes on their individual situation.

    Undergraduate, Graduate, and Professional Students

    • New borrowers with loans made on or after July 1, 2026, will have two repayment options:
      • Standard Repayment Plan, a fixed payment plan with monthly payments based on the amount borrowed.
      • Repayment Assistance Plan (RAP), an income-based repayment plan with monthly payments based on a percentage of borrower income.
    • Current borrowers with no new loans made on or after July 1, 2026, may remain on existing repayment plans until July 1, 2028, by when they must transition to the current Income-Based Repayment (IBR), Standard, Graduated, or Extended plans, or the new RAP plan. The current income-driven ICR, PAYE, and SAVE plans will be sunset as of July 1, 2028.

    Parents of Undergraduate Students

    • New Parent PLUS Loans taken after July 1, 2026, must be repaid under the new Standard Repayment Plan.
    • Current Parent PLUS borrowers must consolidate their loans before July 1, 2026, and enroll in the Income-Contingent Repayment (ICR) plan by July 1, 2028, to maintain eligibility for the Income-Based Repayment (IBR) plan. The ICR plan will be sunset as of July 1, 2028.