Federal Student Aid Updates

Federal student aid changes coming in 2026 (June 2026)

What’s changing on July 1, 2026

Congress passed the One Big Beautiful Bill Act (OBBBA) on July 3, 2025, and it was signed into law on July 4, 2025. This legislation makes significant changes to federal student loans, grants, and repayment options beginning July 1, 2026 for the 2026-2027 academic year.

New federal loan rules for all borrowers.

Enrollment-based loan proration

New restrictions beginning with the 2026-2027 academic year for all student loan borrowers:

  • If you enroll less than full-time, your federal loan amounts will be prorated based on your number of credit hours.
  • Changes to your enrollment status after a loan disbursement—such as dropping or withdrawing from courses—may affect your loan eligibility and could require adjustments to your awarded loan.
  • This applies to Direct Subsidized and Unsubsidized Loans and to Graduate PLUS borrowers in all programs.
  • This enrollment proration does not apply to Federal Parent PLUS loans.

Graduate PLUS Loans

  • Graduate PLUS Loans will no longer be available beginning July 1, 2026, for new borrowers, students beginning a new program or returning after a period of withdrawal or leave of absence.
  • Current loan borrowers who began their program before July 1, 2026 may continue borrowing Federal Graduate PLUS Loans for up to three years of full‑time study, for the remaining length of their program, or until they withdraw or take a leave of absence — whichever occurs first.

Federal Unsubsidized loans –  Graduate students (new borrowers)

  • New borrowers beginning a new graduate program will have new loan limits:
    • Up to $20,500 per year
    • Up to $100,000 – aggregate unsubsidized loan limit
    • Lifetime maximum aggregate: $257,500, includes all loans borrowed at all levels – subsidized, unsubsidized and Grad PLUS loans
  • Current loan borrowers who began their program at the University of Michigan  before July 1, 2026 may continue borrowing under the old loan limits for up to three years of full‑time study, for the remaining length of their program, or until they withdraw or take a leave of absence—whichever occurs first.
  • Current loan borrowers who began their program before July 1, 2026 may continue borrowing under the old loan limits for up to three years of full‑time study, for the remaining length of their program, or until they withdraw or take a leave of absence—whichever occurs first.

Repayment plan changes

Beginning July 1, 2026, new loans will offer only two repayment options:

  1. Standard Repayment Plan
  2. Repayment Assistance Plan (RAP)
    • Income‑based
    • Offers loan forgiveness after a required number of consistent payments

Students with existing federal loans will keep their current repayment plan options.

Please contact Ross Financial Aid if you have any questions regarding financial aid or other questions. Be sure to include your UMID number in all correspondence with our office.

The Ross School of Business Office of Financial Aid is a satellite office of the University of Michigan Office of Financial Aid.