2026 Financial Aid Guidance

What Happened + What to To Do Next

What Happened?

On July 1, 2026, some of the most significant changes to federal student loans, borrowing, and aid in decades went into effect from the One Big Beautiful Bill Act (OBBBA). If you have student loans, are currently in school, or are planning to go his affects you.

Pell Grant Changes from the One Big Beautiful Bill Act (OBBBA)

The One Big Beautiful Bill Act was signed into law on July 4, 2025, bringing significant changes to Pell Grant eligibility effective July 1, 2026 for the 2026-27 academic year.

What's Changing for Eligibility

1. The "Pellionaire" Loophole Is Closed Previously, students from families with low income but high assets could still qualify for Pell Grants. That's no longer the case. Any student with a Student Aid Index (SAI) of 14,790 or higher (twice the maximum Pell Grant amount) is now ineligible — regardless of income. Some current recipients will lose their grants this year because of this change.

2. Full-Ride Scholarship Recipients Lose Pell Eligibility If a student's entire cost of attendance (COA) is already covered by non-federal sources — institutional grants, state aid, or private scholarships — they can no longer receive a Pell Grant on top of that funding. This notably impacts:

• Student-athletes on full athletic scholarships

• Students whose combined institutional/state/private aid meets or exceeds full COA

Note: Institutions can strategically reduce non-federal aid below the COA to preserve a student's Pell eligibility.

3. Foreign Income Now Factored In Automatically Foreign income has always been reported on the FAFSA, but financial aid administrators previously had to manually evaluate its impact. Now, foreign income is automatically included in the AGI calculation, making some families with foreign income ineligible for maximum Pell awards who previously qualified.

What's New: The Workforce Pell Grant Program

Pell eligibility is now expanded to short-term, career-focused programs, creating access for non-traditional students pursuing workforce training. Key details:

• Programs must be 150–600 clock hours, running at least 8 weeks but fewer than 15 weeks

• Must be state-approved as aligned with in-demand jobs and employer needs

• The program must have been offered by the institution for at least one year

• Must meet performance benchmarks: 70%+ completion rate and 70%+ job placement rate within 180 days

• Grant amounts will be proportionally smaller than traditional Pell Grants, calculated based on program length

• Full implementation for 2026-27 will be challenging given the tight timeline and incomplete approval processes

What Is Loan Proration — and Why It Matters Now

Starting with the 2026–27 school year, federal student loans are being prorated based on how many credits you're enrolled in. That means if you're taking less than a full course load, you won't have access to the full annual loan amount. For reference, many students enrolled less than full time may have still borrowed higher than the cost of their course credits to use the excess amounts for out-of-pocket costs like housing, travel, etc.

Here's how it works as an example, if you're enrolled in fewer than 24 credits in an academic year, your loan limit gets reduced proportionally. So if you take 12 credits in the fall and 9 in the spring that's 21 credits total. Divide 21 by 24 and you get 87.5%, which means you're only eligible for about 88% of the standard annual loan limit.

This applies to all undergraduate students and there are no exceptions, even if you qualified for the interim exception on other loan changes.

A few things to know:

• Part-time students are most impacted. If you're working while in school and taking a lighter course load, plan accordingly.

• Parent PLUS loans are not subject to proration — this only affects student borrowers.

• Less federal aid means a bigger gap to fill. Scholarships, grants, and financial aid appeals become even more important if you're not enrolled full-time.

The new law introduced caps on how much you can borrow in federal student loans:

• Master's degrees: Up to $20,500/year, $100,000 lifetime maximum

• Law and Medical school: Up to $50,000/year, $200,000 lifetime maximum

• Parent PLUS loans: $65,000 lifetime maximum

If you're an undergraduate, you're not yet directly affected by the graduate caps but if you're planning graduate school, this changes your financial picture significantly. If you haven’t begun college yet and your parents were planning to use PLUS loans to help cover your undergrad costs, the lifetime cap affects what's available to them.

The bottom line: federal loans are covering less. The gap you'll need to fill through other means just got wider.

More FAFSA Resources: Most Valuable Links Page

2026 Student Loans Guidance Page