2026-2027 Financial Aid Updates
About the One Big Beautiful Bill Act (OBBBA)
On July 4, 2025 the One Big Beautiful Bill Act (OBBBA) was signed into law. The following information is designed to provide continual guidance on what has changed related to federal student aid programs. While many of these changes are still working through the finalization process within the Department of Education (ED), these regulations are scheduled to become effective on July 1, 2026.
Note: As ED releases further guidance and finalizes the rules, we will continue to update this page with the most accurate and actionable information available. We understand that students, families, and others have questions, and we are here to help.
What Has Not Changed for MSU Students
- Direct Loan annual limits for undergraduate and graduate students will continue to remain the same.
- Aggregate (lifetime) loan limits for undergraduates will remain the same ($31,000 for dependent undergraduates and $57,500 for independent undergraduates).
Federal Direct Loan Annual Limits
What is Changing
The following changes are the most relevant to MSU students, and do not constitute a complete list of all changes within OBBBA. Please contact the Financial Aid and Scholarships Office for additional information on how any of these changes may impact your specific circumstances.
Beginning with the 2026-2027 academic year, direct loan amounts will be disbursed in direct proportion to the percent of full-time status met for the loan period (fall and spring semesters combined). Annual loan limits will be calculated using the following formula:
Number of credit hours enrolled for the academic year ÷ Number of credit hours considered full-time X 100
This change could have an effect on students withdrawing from classes. The example below illustrates how annual limits would work for a dependent freshmen student who is enrolled full-time (12 hours) and drops a 3-credit hour course.
- If full-time both fall and spring semesters, they could receive $5,500/year ($2,750/semester)
- Drops to 9 hours in fall after initial disbursement
- No changes to the fall loan disbursement are required at that point in time
- Enrolls for 12 hours in the spring semester
- 9 hours in fall + 12 hours in spring = 21 annual credit hours
- 21/24 credits is 87.5%
- 87.5% of $5,500 = $4,812
- $4,812 would be the annual limit
- Financial Aid Office would subtract $2,750 (received in the fall) to determine the amount of remaining loan eligibility for spring
- Since the student had already received $2,750 in the fall, the spring loan amount would be $2,062.
The Federal Graduate PLUS Loan program is eliminated starting July 1, 2026. Graduate students needing additional loan resources (beyond their $20,500 annual Direct Unsubsidized Loan limit) would be able to apply for private education loans. During the 2024-2025 school year, approximately 3% of all graduate students at MSU borrowed from the Graduate PLUS Loan program. Contact the Financial Aid and Scholarships Office to discuss options.
There is a legacy provision for students who received a direct loan disbursement prior to July 1, 2026 to allow them to continue receiving the Graduate PLUS loan for up to three academic years or the completion of their current program, whichever comes first. The legacy provision requires continuous enrollment, so if a student withdraws or stops out for a semester they will no longer be under the legacy provisions. The student will also lose access to the Graduate PLUS loan legacy provision if they change their graduate program.
Federal Direct Unsubsidized Loans for graduate students will continue to have an annual limit of $20,500, however, a lifetime limit of $100,000 for graduate students is now enacted. This lifetime limit would not include loans borrowed as an undergraduate student.
There is a legacy provision for students who received a direct loan disbursement prior to July 1, 2026 to allow them to continue receiving federal direct loans at the current lifetime limit ($138,500, which includes loans received as an undergraduate and graduate student) for up to three academic years or the completion of their current program, whichever comes first. The legacy provision requires continuous enrollment, so if a student withdraws or stops out for a semester they will no longer be under the legacy provisions.
Parent PLUS Loans (available only to the parents of dependent undergraduate students) will be capped at $20,000 annually per student. In addition, a lifetime limit of $65,000 in Parent PLUS Loan (per student) is also enacted.
There is a legacy provision for students who received a direct loan disbursement prior to July 1, 2026 to allow them to continue receiving the parent PLUS loan at the current limit (Cost of Attendance minus any other aid) for up to three academic years or the completion of their current degree, whichever comes first. The legacy provision requires continuous enrollment, so if a student withdraws or stops out for a semester they will no longer be under the legacy provisions.
Borrowers with new loans disbursed on or after July 1, 2026 will have two repayment options; a new standard plan and a new income-driven repayment plan (RAP).
Current borrowers with no new loans disbursed on or after July 1, 2026 are eligible for the current Standard, Graduated, Extended, or Income-Based repayment plans. They may also opt into the new income-driven repayment plan (RAP).
Student loan servicers will be able to provide the most current information as students enter the repayment process.
As currently written, students who have a total of non-federal grants and/or scholarships that equals or exceeds their full cost of attendance will be ineligible for Pell Grant.