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The Recent Reconciliation Bill: What We Know So Far

FAFSA Updates

  • The Department of Education released the system updates required to process FAFSA applications submitted since April 2026, following a nationwide processing freeze. Our Chicago Financial Aid team is working to process these awards. To ensure all students are accommodated fairly, we are prioritizing files based on program start dates, focusing first on students who have already begun classes or are starting in Summer.

 What We Know

GradPLUS Loans Are Unavailable for New Borrowers

  • Starting July 1, 2026, new borrowers will no longer receive federal GradPLUS Loans.
  • If you are enrolled in a current program and have borrowed a Federal Direct Loan (Unsubsidized or PLUS) before July 1, 2026, you will still be able to access GradPLUS during the Limited Exception Period as described below.
Limited Exception Period
  • Borrowers who have been enrolled in their program on or before June 30, 2025, and received a Direct Loan disbursement during their program will retain their GradPLUS eligibility until:
    • June 30, 2029, OR
    • The time to credential, whichever occurs FIRST.
      • Time to credential is defined as the published number of days, weeks, and months required for a Full time student to complete that degree. This time to credential begins on the student's first date of enrollment in that program.
    • This limited exception applies only to loans borrowed for your current program. If you borrowed GradPLUS for a previous program and start a new one after July 1, 2026, you won’t be eligible for the loan in your new program.
    • If you have transferred universities and you previously received GradPLUS Loans, your change in enrollment severed your GradPLUS eligibility
    • If you take a leave of absence or transition to a new degree program, you will be considered a new borrower upon the start of that new degree or when you return from leave 
    •  

New Graduate Loan Limits Are Coming

Starting July 1, 2026:

  • Graduate students: Annual loan limit of $20,500 per year with an aggregate limit of $100,000 for al graduate-level loans
  • Professional (Law, Med) students: Annual loan limit of $50,000 per year with an aggregate limit of $200,000
  • New Lifetime limit of $257,500 for combined undergraduate and graduate/professional borrowing.
  • Graduate students will have different loan eligibility compared to "Professional" students defined by the Department of Education (JD, JD-MBA, MD).
  • Borrowers have a lifetime maximum aggregate borrowing limit of $257,500. This lifetime limit is regardless of whether previous loans were cancelled, forgiven, discharged, or otherwise reduced. 

Undergraduate Loan Limits Remain the Same

  • No changes were made to undergraduate borrowing limits, loan types or the Pell grant program.
  • However, Parent PLUS Loans will be capped starting July 1, 2026, at $20,000 per student per year and a lifetime maximum of $65,000 per student.
  • Parent PLUS borrowers who have borrowed for their students prior to July 1, 2026, the parent borrower can continue to borrow the Parent PLUS at the current (pre-July 1, 2026) borrowing levels for up to an additional 3 years or the end of student’s program, whichever is first.

Public Service Loan Forgiveness (PSLF) Is Unchanged

  • There are no changes to PSLF in this bill. Students pursuing careers in qualifying public service roles will still have this option available.

 

Can Students Opt Out of the GradPLUS Limited Exception?

No. Students cannot opt-out of the limited exception period in order to receive the increased Unsubsidized Loan limits.

Loan Proration for Part-Time Students

Beginning in Award Year 2026-27, ALL Federal Direct Loans must be prorated based on the student's enrollment. This includes students who fall under the Limited Exception period.

Major Changes to Repayment Plans

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 prior to July 1, 2026 and will borrow a new loan after July 1, 2026 are limited to the new RAP or the standard plans. 
  • The good news: RAP borrowers will not be locked into a 30-year plan. They can switch to a standard 10- or 25-year plan if they choose.
  • Current borrowers who do not borrow a loan after July 1, 2026 and want to stay in an income-driven plan must enroll by June 30, 2028. Those who don’t will be automatically moved into RAP.

We’ll share more about RAP once ED releases more guidance, including examples of how it could affect monthly payments and long-term costs.

 What’s Next?

Our office is closely tracking all of these changes and will be updating this site to help students and alumni understand what these changes may mean for their financial aid. As soon as we have more concrete answers from ED and NASFAA, we’ll post updates..

In the meantime:

  • There is no change to financial aid for the 2025–26 academic year.
  • If you’re starting a new graduate program before July 1, 2026, you may still be eligible for GradPLUS under the current rules.

The National Association of Student Financial Aid Administrators has put together a helpful chart that reviews all the provisions of the reconciliation bill. That can be found here