Federal Student Aid Changes
Congress recently passed the One Big Beautiful Bill Act, which introduces changes to federal student aid starting on July 1, 2026. These changes take effect for the 2026–2027 academic year, impacting our undergraduate, graduate and professional students who utilize Title IV funds.
The new legislation updates Pell Grant eligibility, requires loan proration for less than full-time enrollment, eliminates the Graduate PLUS Loan for new borrowers, modifies the Parent PLUS Loan, places new loan limits on borrowers, and restructures repayment options.
Our Office of Financial Aid is closely monitoring the official guidance from the Department of Education and will continue to share updates. Please note that the information shared below is subject to change.
We understand that these shifting regulations may complicate your financial planning and bring up a lot of questions. We are here to support you in any way we can.
1. Students receiving non-federal aid (institutional scholarships, outside scholarships, 3rd party funds, etc.) that fully covers their Cost of Attendance (COA) will no longer be eligible for the Pell Grant, even if they were initially determined to be eligible based on the results of their FAFSA.
Example: An in-state undergraduate student living on campus has a COA of $30,986 for the standard academic year (fall/spring). If the student receives non-federal aid that meets or exceeds this COA, they will not be eligible for the Pell Grant.
2. Students whose Student Aid Index (SAI) is greater than twice the maximum Pell Grant amount will no longer be eligible for the Pell Grant.
Example: The maximum Pell Grant amount awarded for the 2026-2027 standard aid year (fall/spring) is $7,395 and two times that amount is $14,790. Students with an SAI greater than 14,790 will not be eligible for the Pell Grant.
Starting in the Fall 2026 semester, the Subsidized Loan, Unsubsidized Loan, and Graduate PLUS Loan will be required to be reduced for undergraduate, graduate, and professional students enrolled less than full-time. This process is called the Schedule of Reductions (SOR) and will occur at the time of financial aid disbursement. Refer to the Academic Calendar or Financial Calendar to review the initial disbursement date by term.
- The Parent PLUS Loan is not subject to SOR.
- Students must still meet the minimum half-time enrollment requirement based on their academic level to be eligible for federal student loans
| Academic Level | Half-time Enrollment | Full-time Enrollment |
| Undergraduate | 6 | 12+ |
| Graduate | 3 | 6+ |
Important Note:
Dropping or withdrawing from a course after the start of the term may reduce federal loan eligibility. Students
are encouraged to contact their academic advisor and the Office of Financial Aid before
making changes to their course schedule.
Financial aid is awarded based on full-time enrollment. Undergraduate students are generally expected to enroll in at least 12 credit hours per fall/spring term for a total of 24 or more credit hours during the standard fall/spring academic year.
If you enroll in 12+ credit hours for a term, then you would be eligible for 50% of the annual loan amount for that term. If you enroll in 6 credit hours for a term, then you would be eligible for 25% of the annual loan amount for that term.
Schedule of Reduction Formula by Academic Year:
Example: You are a dependent junior-level undergraduate student eligible for $7,500 in the Unsubsidized Loan.
What Happens if You are not Enrolled Full-time:
If you enroll in 9 credits in the fall before your loan is disbursed, your loans must
be reduced because you are now on track to complete 21 hours instead of 24 hours.
Your New Enrollment Plan for the Year:
- Fall: 9 credits
- Spring (expected): 12 credits
- Total: 21 credits
Originally, full‑time for the year was 24 credits, but now you’ll only have 21 credits.
Percent of Full-Time You’re Completing:
(21 ÷ 24) x 100 = 87.5% (rounded to 88%)
This means you are scheduled to complete 88% of the credits needed to be considered full‑time for the combined fall and spring
terms.
How This Affects Your Loan:
Since you’re only completing 88% of the needed credits, you can only receive 88% of your $7,500 loan limit.
The figures below represent your new annual loan limits:
- $5,500 x 88% = $4,840 subsidized
- $2,000 x 88% = $1,760 unsubsidized
Financial aid is awarded based on full-time enrollment. Graduate students are generally expected to enroll in at least 6 credit hours per fall/spring term for a total of 12 or more credit hours during the standard fall/spring academic year.
If you enroll in 6+ credit hours for the fall, then you would be eligible for 50% of the annual loan amount for that term. If you enroll in 3 credit hours for the term, then you would be eligible for 25% of the annual loan amount for the spring term.
Example:
Annual Amount: $20,500
50% of Annual Amount = $10,250
25% of Annual Amount = $2,563
Schedule of Reduction Formula by Academic Year:
Example: You are a graduate student eligible for $20,500 in the Unsubsidized Loan.
What Happens if you are not Enrolled Full-time:
If you enroll in 3 credits in the fall before your loan is disbursed, your loans must be reduced because you are now on track to complete 9 hours instead of 12 hours.
Your New Plan for the Year:
- Fall: 3 credits
- Spring (expected): 6 credits
- Total: 9 credits
Originally, full‑time for the year was 12 credits, but now you’ll only have 9 credits.
Percent of Full-Time You’re Completing:
(9 ÷ 12) x 100 = 75%
This means you are scheduled to complete 75% of the credits needed to be considered full‑time for the combined fall and spring
terms.
How This Affects Your Loan:
Since you’re only completing 75% of the needed credits, you can only receive 75% of your $20,500 loan limit.
The figure below represents your new annual loan limits:
- $20,500 x 75% = $15,375 unsubsidized
Starting July 1, 2026, the Graduate PLUS Loan program will only be available to students who qualify for the "Legacy Provision" exception detailed below.
The new legislation also introduces updated annual and lifetime (aggregate) limits for the Unsubsidized Loan. These new caps will differ based on whether you are enrolled as a Graduate or Professional student.
Graduate PLUS Loans will only remain available to currently enrolled previous borrowers who meet specific "legacy" criteria. Summer 2029 will be the final term of legacy status for any student who qualifies, regardless of their remaining time to credential. If you qualify, you will remain under the prior loan limits and can continue using Graduate PLUS Loans. Students cannot opt out of legacy status.
Note: Students starting a new school or program on or after July 1, 2026, are not eligible for the legacy provision.
To initially qualify for the legacy provision, you must:
- be enrolled at South for the Spring 2026 or Summer 2026 term,
- have received at least one disbursement of a Unsubsidized Loan or Graduate PLUS Loan for your current graduate program prior to July 1, 2026,
- be currently enrolled within your program’s standard timeframe to complete the credential (program length),
- and meet all standard federal financial aid requirements, including minimum credit hour enrollment and Satisfactory Academic Progress (SAP).
Time to Credential (Program Length)
"Time to credential" or "program length" is the standard timeframe required to complete your degree when enrolled full-time. To determine how long you can keep your legacy status, the university must use this standard timeframe as your hard deadline for Graduate PLUS Loan eligibility. If you exceed your program's standard length, you automatically lose your legacy provision status.
Example: If your graduate program has a standard 2-year track, you must finish within those 2 years. If you require a 3rd year to complete the program, you will no longer be eligible for the legacy provision during that final year.
Loss of Legacy Status
Even though you may initially qualify for the legacy provision, you will lose the legacy status if you:
- exceed the program’s standard time to credential,
- withdraw from any term,
- take a fall or spring semester off,
- or change graduate or professional programs.
Once legacy status is lost, it cannot be regained or appealed.
| Student Type | Non- Legacy Annual Loan Limit |
Non- Legacy Aggregate (Lifetime) Loan Limit |
Legacy Annual Loan Limit |
Legacy Aggregate |
|---|---|---|---|---|
| Graduate | $20,500 Unsubsidized | $100,000 Unsubsidized (not including Undergraduate loans) | $20,500 Unsubsidized | $138,500 (including Undergraduate loans) |
| Professional* (Medicine) | College of Medicine loan limits can be found by visiting the College of Medicine Financial Aid website under the Federal Student Aid: What is Available option. | |||
Lifetime Federal Loan Cap - $257,500 (All types of loans included except the Parent PLUS)
*Note: The Department of Education determines the list of programs that qualify as “Professional.” Currently, South only has one federally designated professional program: Medicine, M.D.
Currently enrolled, previous borrowers may qualify for the legacy provision that allows for continued borrowing under the previous limits determined by the formula of “Cost of Attendance - Other Aid (i.e., grants, scholarships, private student loans)”.
Beginning Fall 2026, there are new annual and aggregate loan limits for the Parent PLUS Loan. This is a per-student limit, not a per-parent limit. All new students beginning classes at South on or after July 1, 2026, will be subject to these new limits.
Summer 2029 will be the final term of legacy status for any student who qualifies,
regardless of their remaining time to credential. Students cannot opt out of legacy
status.
To initially qualify for the legacy provision, you must:
- be enrolled at South for Spring 2026 or Summer 2026,
- have received at least one disbursement of a Subsidized Loan, Unsubsidized Loan or Parent PLUS Loan for their undergraduate program before July 1, 2026,
- be enrolled within their program’s standard time to credential (program length), and
- meet the standard federal aid eligibility requirements, including minimum credit hours and Satisfactory Academic Progress requirements
Time to Credential (Program Length)
"Time to credential" or "program length" is the standard timeframe required to complete your degree when enrolled full-time. To determine how long you can keep your legacy status, the university must use this standard timeframe as your hard deadline for Parent PLUS Loan eligibility. If you exceed your program's standard length, you automatically lose your legacy provision status.
Example: If your undergraduate program has a standard 4-year track, you must earn your degree within 4 years. If you require a 5th year to earn your degree, you will no longer be eligible for the legacy provision during that final year.
Note:
- Legacy borrowers will NOT lose eligibility if their student changes majors to a different undergraduate program after July 1, 2026. However, changing majors may extend the student’s time to complete their degree, exceeding the 3-year maximum allowed for legacy status. If that occurs, parents may lose access to the Parent PLUS Direct Loan program under the pre-July 1, 2026, rules before the student graduates.
- If a student who loses legacy status has already received the $65,000 aggregate amount in PLUS Loans, they will have no future eligibility remaining for this loan, not even at the new limits.
Loss of Legacy Status
Even though you may initially qualify for the legacy provision, you will lose the legacy status if you:
- exceed the program’s standard time to credential,
- withdraw from any term,
- take a fall or spring semester off, or
- change undergraduate levels, transition from first undergraduate degree program to second undergraduate degree program.
Once legacy status is lost, it cannot be regained or appealed.
As of July 1, 2026, parents can only borrow up to $20,000 per year per student and $65,000 lifetime per student. These limits apply to all parents of a student, so the maximum amount a student may receive in a year is $20,000, and the lifetime amount is $65,000, regardless of whether one or more parents are borrowing on the student’s behalf. This is a change from the current process, which allows parents to borrow up to the full cost of attendance per student.
Note:
- A parent who borrows a $20,000 PLUS Loan per academic year for years 1-3 will only have $5,000 remaining to borrow in year 4.
Below are updates related to loan repayment:
- New and simplified Repayment Assistance Plan (RAP) with rates 1% to 10% of discretionary income
- Elimination of the SAVE plan
- Extension of forgiveness periods to 30 years
- Introduction of minimum monthly payments
- All loans must be repaid on the same plan, so if you borrow before and after July 1, 2026 you will be limited to the standard or RAP plans
- If you do not borrow new loans after July 1, 2026 you will be eligible to enroll in the current Standard, Graduated, Extended, or current Income Based (IBR) repayment plans, and may also opt in to the new RAP.
Review Federal Student Aid's Federal Student Loan Repayment Plans webpage for more detailed information. Questions related to the repayment process and plans should be directed to FSA support staff or your loan servicer, if one has been assigned at this time.
Next Steps & Options
It is important that you gain an understanding of these new financial aid updates so that you are prepared to make informed decisions as you move forward each term.
We encourage you to review the information shared on this webpage and pay attention to the communications shared with you from Federal Student Aid and South. (i.e., JagMail, PAWS, texts, etc.)
If you have an outstanding balance due after all forms of aid (federal aid, scholarships, etc.) have been applied toward your charges, you may consider enrolling in the payment plan.
This will allow you to divide payments over 3 or 4 monthly installments instead of paying in full at once.
We encourage our students to explore both institutional and outside scholarship opportunities every year.
This will take an investment in your time and effort, but it could pay off for you!
FAQs
- Aim for full-time enrollment: Whenever possible, enroll full-time in classes required for your degree.
- Map out your schedule: Work with your academic advisor to carefully plan your class schedule each term.
- Maintain SAP requirements: Ensure you continue to meet the GPA, Pace of Progression, and Maximum Time Frame
components required by the Satisfactory Academic Progress policy.
- Ask before you change your schedule: Contact our office if you have questions about your aid, and always reach out before dropping or withdrawing from a class.