H.R.1 Financial Aid changes

Notification of Changes

On July 4, 2025, the H. R. 1 (One Big Beautiful Bill Act) was signed into law, enacting several changes to federal student aid programs. We are awaiting further guidance from the U. S. Department of Education to better understand the impacts of this legislation, its effects on students, and its future implementation. We will update this page as new information becomes available, and when we receive official guidance from the U.S. Department of Education.

The following changes were made to financial aid programs, impacting both undergraduates and graduates. These will go into effect July 1, 2026 for the academic year 2026–2027.

Financial aid impact by student level

Loan Reduction Due to Less than Full-time Enrollment

Institutions are required to reduce annual loan amounts in direct proportion to the percent of full-time status the student is enrolled.
If a student drops a course or withdraws a course at any point within the semester and they go below full-time, we will be required to reduce their loans.
This will be effective for the 2026-2027 aid year for ALL students.

Undergraduate Student Example

Student is full-time for Fall semester (12 credits)—12/24 = 50%
Loan is disbursed at full-time (12 credits) (50%)—$2,750 of a $5,500 loan
Student withdraws from one class (3 credits) but keeps the 50% Fall disbursement
Student enrolls full-time for Spring. 12 credits (50%) BUT
Since their total enrollment is now 21 credits (remember they withdrew from a 3 credit class for fall, 9+12 = 21 / 24 or 87.5%) …
They can only receive 87.5% of the total annual loan amount… $5,500 x 87.5% = $4,813
And the Fall amount must be subtracted before the Spring amount can be released
So, the Spring amount would be 37.5% of the annual amount ($4,813-$2,750 or $2,063)

Parent PLUS Loan Limits

Legacy: Parents who previously borrowed for their dependent student prior to July 1, 2026, can borrow Parent PLUS loans for the student for up to 3 years or their student's expected time to credential with no limits other than Cost of Attendance. Students must maintain concurrent enrollment. If they withdraw from a semester or don't attend a semester, they are no longer a legacy student. Expected time to credential is based on full-time enrollment. If a student is going to school part-time, they could lose legacy status due to this.

Annual limit: $20,000 per year, per student.
Lifetime limit: $65,000 aggregate per dependent student.

What "Expected Time to Credential" Means

Under the One Big Beautiful Bill Act (OBBBA), expected time to credential is used to determine how long certain students can remain eligible for “legacy” federal loan rules for Parent PLUS loans after those regulations are enforced beginning on July 1, 2026.

Expected time to credential is how much time a student should reasonably need to finish their current program, assuming full‑time enrollment, based on the program’s published length—minus the time they’ve already completed. The expected time to credential for a Bachelor’s Degree program is 4 years, attending full-time (12 credits or more) each semester.

Transferring and Change of Major/Programs

Students transferring from one institution to another or from an Associate Degree program to a Bachelor's Degree program will not be considered a legacy student. Undergraduate students will lose the Parent PLUS Loan legacy provision when this occurs and will be subject to the new annual and lifetime loan limits. This means if a parent has previously borrowed the annual or lifetime PLUS loan limits, they will not be able to borrow any more for that year or for that student's remaining time of enrollment.

Students cannot opt out of the legacy provisions. If they follow the guidelines, they will continue to be legacy students under the old rules for the next 3 years beginning Fall 2026.

Pell Grant Changes

The One Big Beautiful Bill Act has tightened the regulations on who can receive the Federal Pell Grant. Below are those changes.

Higher Income Threshold (SAI Limit): Students whose Student Aid Index (SAI) is equal to or greater than twice the maximum Pell award (about $14,790 for 2026–27) will not be eligible—even if their income is lower. FSA Partner Connect
Students with Full Scholarships: If a student has enough non-federal scholarships and grants (like a full-ride scholarship) to cover their entire cost of attendance, they cannot also get a Pell Grant. NAICU
Foreign Income Counts for Eligibility: If a family has foreign earned income, it must now be included in calculating eligibility — which can raise the SAI and reduce or eliminate Pell eligibility. FSA Partner Connect

Together, these changes mean some students who previously qualified could lose Pell Grant eligibility.

Lifetime Limit (all loans): $257,500

Excluding Parent PLUS loans where student received funds for parent's loan application.
Includes undergraduate, graduate, Grad PLUS Loans, and Parent PLUS loans where the individual is the one who borrowed.
Legacy: If a borrower has a Federal Direct or Grad PLUS loan disbursed prior to July 1, 2026, they can continue to receive loan disbursements for up to 3 years, or the student's expected time to credential, as long as they maintain concurrent enrollment. If they withdraw from a semester or don’t attend a semester, they are no longer a legacy student.

Graduate Loan Limit:

Lifetime:
- $100,000 for new graduate students beginning Fall 2026.
- $200,000 for 'professional' students: Law schools and medical schools only.
  - St. Cloud State University does not offer professional degree programs.
- Does not include loans borrowed as an undergraduate student.
- Legacy Students—their lifetime loan limit is still $138,500 and includes undergraduate and graduate loans.
Annual:
- $20,500 for most graduate students (unchanged).
- $50,000 for 'professional' students: Law schools and med schools only.
  - St. Cloud State University does not offer professional degree programs.

Grad PLUS Loans:

This program has been eliminated as of July 1, 2026. If you are a new graduate student for the 2026–2027 school year, or have graduated and are starting a new graduate program, the Grad PLUS Loan will no longer be available to you.

Legacy: If a borrower has a Federal Direct (Unsub or PLUS) loan disbursed prior to July 1, 2026, they can continue to receive loan disbursements for up to 3 years or the student's expected time to credential as long as they maintain concurrent enrollment. If they withdraw from a semester or don't attend a semester, they are no longer a legacy student

What “Expected Time to Credential” Means Under OBBBA

Under the One Big Beautiful Bill Act (OBBBA), expected time to credential is used to determine how long certain students can remain eligible for “legacy” federal loan rules, especially PLUS loan and higher unsubsidized loan limits, after those programs are largely eliminated on July 1, 2026.

Expected time to credential is how much time a student should reasonably need to finish their current program, assuming full‑time enrollment, based on the program’s published length—minus the time they’ve already completed. The expected time to credential for graduate students vary based on the certificate or degree program they are enrolled in.

Transferring and Change of Major/Programs

Students must maintain concurrent enrollment in their current program, started prior to July 1, 2026. If a student changes their program of study, that is not concurrent enrollment, and they lose their legacy status. If a student graduates and then starts a new program within the next 3 years, that is not concurrent enrollment, and they lose their legacy status.

Students cannot opt out of the legacy provisions. If they follow the guidelines, they will continue to be legacy students under the old rules for the next 3 years beginning Fall 2026.

Loan Reduction Due to Less than Full-time Enrollment

Institutions are required to reduce annual loan amounts in direct proportion to the percent of full-time status the student is enrolled.
If a student drops a course or withdraws from a course at any point within the semester and they go below full-time, we will be required to reduce their loans in a subsequent term.
This will be effective for the 2026–2027 aid year for ALL students.

Graduate Student Example:

Student is full-time for Fall semester (6 credits)—6/12 = 50%
Loan is disbursed at full-time (6 credits) (50%)—$10,250 of a $20,500 loan
Student withdraws one class (3 credits) but keeps the 50% Fall disbursement
Student enrolls full-time for Spring. 6 credits (50%) BUT
Since their total enrollment is now 9 credits (3+6 = 9/12 or 75%) …
They can only receive 75% of the total annual loan amount… $20,500 x 75% = $15,375
And the Fall amount must be subtracted before the Spring amount can be released
So the Spring amount would be 25% of the annual amount ($20,500-$10,250 or $5,125)

Grad PLUS loans also need to be prorated.

When a student is considered a "legacy borrower," what does that mean?

Students who are eligible for the interim exception to the new loan limits have been referred to by some as legacy borrowers. Eligibility for the interim exception is contingent upon whether a student was enrolled in a program of study at an institution as of June 30, 2026, and received a Direct Loan for that program prior to July 1, 2026.
Once eligibility is established, students are eligible for the pre-Working Families Tax Cuts Act (pre-July 1, 2026 rules) loan limits during their expected time to credential, defined as the expected time for a student to complete a program that is equal to the lesser of three academic years.
For graduate and professional students who have established eligibility for the interim exception, the annual Unsubsidized Loan limit is $20,500 and they can continue to borrow Grad PLUS Loans up to the cost of attendance minus other financial assistance.
For parent borrowers who have established eligibility for the interim exception, Parent PLUS Loan borrowing remains up to the cost of attendance minus other financial assistance. Undergraduate borrowing is unaffected. No eligible borrowers are subject to the Lifetime Maximum Aggregate Loan Limit during their expected time to credential.

Is a student’s eligibility for the interim exception based on the timing of disbursement or whether the loans are for a particular academic or award year?: Eligibility for the interim exception is based on whether the student was enrolled in a program of study at an institution as of June 30, 2026, and received (was disbursed) a Direct Loan for that program prior to July 1, 2026. If the conditions are met, the student is eligible for the interim exception for the lesser of three years or the difference between the program length (published) and the amount of time the student has been in the program.

A student is currently in a program and has received undergraduate loans, but the parent did not take out a Parent PLUS Loan. Would that parent be subject to the new loan limits if they decide to take out a loan on or after July 1, 2026?: The parent of a dependent borrower would be subject to the new loan limits on or after July 1, 2026, if neither they nor the student took out a Direct Loan prior to July 1, 2026, for the program of study at an institution that the student was enrolled in by June 30, 2026. If, however, the student received a Direct Loan prior to July 1, 2026, for that program of study, the parent would be eligible for the interim exception to the new loan limits during the student’s expected time to credential, defined as the lesser of three academic years and the difference between the program length and the period of such program of study that such individual has completed prior to July 1, 2026.

Can a student opt out of the interim exception? For example, if a professional student is eligible for the interim exception, can they opt out of receiving the legacy $20,500 annual Unsubsidized Loan limit in favor of the new annual $50,000 professional loan limit?: No. A borrower is not permitted to opt out of the interim exception so that they may receive the new annual loan limits. Students who meet the conditions for the interim exception are subject to all legacy loan limits and cannot opt out.

In the instance of a dual undergraduate and graduate program, would the student be eligible for both Parent PLUS and Grad PLUS for the remainder of their legacy eligibility?: The student’s parents could be eligible for Parent PLUS when they are considered an undergraduate student and otherwise meet the eligibility criteria. The student would be eligible for Grad PLUS when they are considered a graduate or professional student, assuming all other eligibility criteria are met.

If a student is still enrolled in their program beyond their program length and the student has not completed their degree and their parent has already borrowed $65,000 in Parent PLUS Loans for their student, will the parent have any PLUS borrowing eligibility left?: No. If the parent borrower is not eligible for the interim exception because the student is enrolled beyond their program length, they cannot continue to borrow once they reach the $65,000 aggregate maximum limit.

If a graduate student loses their legacy eligibility (withdraws during fall term) but has a Grad PLUS Loan for the full year and returns for spring, will the spring disbursement of the Grad PLUS have to be canceled?: Yes. The Graduate PLUS Loan for spring will be canceled as the student is no longer eligible for this disbursement. Once the student loses eligibility for the interim exception, they are not permitted to receive Graduate PLUS Loans.

If a graduate student completes or withdraws from their program of study, do all previous borrowed loans count toward their $100,000 aggregate loan limit?: Graduate students are subject to the new $100,000 aggregate loan limit when they complete or withdraw from the program in which they are currently enrolled. All Subsidized and Unsubsidized Loans previously borrowed for graduate degrees count toward the $100,000 limit. These students may not receive additional Unsubsidized Loans until they are repaid, whether in full or in part.