Key Changes to Federal Student Aid
The One Big Beautiful Bill Act (OBBBA)
The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, resulting in changes to the higher education landscape, including federal student loan eligibility and repayment. Several provisions went into effect immediately, while other provisions will begin as of July 1, 2026.
The Fashion Institute of Technology remains dedicated to supporting students and their families as they adjust to updates in federal financial aid programs. We will keep the FIT community informed and provide further updates as new guidance is released by the U.S. Department of Education.
Notice: The information shared on this page is currently evolving. Information may change as federal rules and guidelines are established. Students and families are encouraged to monitor studentaid.gov for more information.
Federal Pell Grant Eligibility
Beginning with the 2026–27 award year:
- 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.
- The maximum Pell Grant amount for 2026–27 is $7,395, a student with an SAI index of 14,790 or greater will not be eligible for a Federal Pell Grant.
- A limited exception applies for dependents of deceased service members and safety officers.
Federal Loan (Undergraduate Students)
- New Limits for Parent PLUS Loans: New borrowers will have an annual limit of $20,000 and a aggregate limit of $65,000 per dependent student.
- Lifetime borrowing limit on all federal student loans, excluding PLUS Loans: $257,500
» Federal Undergraduate Student Loan Information
Federal Loan (Graduate Students)
- Graduate PLUS Loans will no longer be available to new borrowers starting July 1, 2026.
- Legacy Provision: Existing students with a Federal Direct Loan disbursed before July 1, 2026, can continue under the current limits until the completion of their current program or for up to three additional years, whichever is less.
- Annual Loan Limits: $20,500 for graduate students.
- Aggregate limits are: $100,000. Amounts do not include amounts borrowed at the undergraduate level.
- Lifetime borrowing limit on all federal student loans, excluding PLUS Loans: $257,500
» Federal Graduate Student Loan Information
Annual Proration for Less Than Full-Time Enrollment
- Beginning July 1, 2026, loan limits will be prorated depending on enrollment level, similar to grant funding. This means all borrowers enrolled less than full-time will only be able to borrow loan amounts in direct proportion to their credit load, with a minimum half-time enrollment requirement. There is no legacy provision for this new rule.
- The yearly amount of a loan a student can receive will be based on whether they are enrolled in at least 24 credits required for their degree program per academic year (in the fall and spring semesters combined).
- Courses that do not count toward your program will not be included when determining your enrollment level for financial aid purposes.
- For example, a first-year freshman has a maximum yearly federal student loan eligibility of $5,500. If they decide to take the maximum amount they are allowed each semester, the following scenarios apply:
| Degree Credits Enrolled In and Completed | Yearly Loan Amount for Freshman without Origination Fees |
Percentage of Yearly Loan Maximum |
|---|---|---|
|
Enrolls in and completes 12 required credits in the Fall Semester |
$2,750 fall |
50% fall |
|
Enrolls in and completes 9 required credits in the Fall Semester |
$ 2,062.50 fall |
37.5% fall |
|
Enrolls in and completes 12 required credits in the Fall Semester |
$ 2,750 fall |
50% fall |
|
Enrolls in 12 and completes 9 required credits in the Fall Semester |
$ 2,750 fall |
50% fall |
|
Enrolls in 12 and completes 6 required credits in the Fall Semester |
$ 2,750 fall |
50% fall |
|
Enrolls in and completes 6 required credits in the Fall Semester |
$ 1,375 fall |
25% fall |
Legacy Provision
- Direct Loan (Students with a Federal Unsubsidized and/or Graduate Plus) disbursed before July 1, 2026, who remain
- Students in the same program of study may continue to borrow under existing Graduate PLUS Loan rules for up to 3 more academic years or until their program ends – whichever comes first.
- Parents who borrowed before July 1, 2026, may continue borrowing under existing Parent PLUS Loan rules which allow for a PLUS loan up to the Cost of Attendance for up to 3 more academic years or the student completes their program – whichever comes first.
- Students must remain continuously enrolled in the same credentialed program to retain legacy borrowing eligibility. A withdrawal, a lapse in enrollment, or change in program/degree level may terminate the legacy provision.
Federal Loan Repayment
- Borrowers who receive new federal student loans on or after July 1, 2026, will have
access to only two repayment plan options:
- Standard Repayment Plan - fixed monthly payments ranging from 10 to 25 years depending on the amount borrowed.
- Repayment Assistance Plan (RAP), an Income-Based Repayment (IBR) plan.
- Borrowers who do not select a repayment plan will automatically be enrolled in the new Standard Repayment Plan.
- Borrowers currently enrolled in the following repayment plans must transition to another
eligible repayment option by July 1, 2028:
- Income-Contingent Repayment (ICR)
- Pay As You Earn (PAYE)
- Saving on a Valuable Education (SAVE)
- Borrowers who do not select a new repayment plan by July 1, 2028, will automatically be enrolled in RAP.