Navigating Federal Aid Changes
We know paying for graduate school can get confusing, especially with recent changes to federal student aid. Use this guide to learn how the One Big Beautiful Bill Act (OB3) will affect federal student loans and impact your financing options.
How OB3 Affects Federal Student Aid
The One Big Beautiful Bill Act (OB3) was signed into law on July 4, 2025, and introduces significant changes to federal student aid. Please note: Final regulations for federal student loans under OB3 were issued by the Department of Education on May 1, 2026.
The information below reflects the most current guidance available as of 6/12/2026. Smith College Student Financial Services (SFS) will continue to make updates regarding the scope and effect of these changes as we receive additional guidance on the final regulations issued.
Key Updates to Federal Loans
The new law introduces changes to how graduate students finance higher education. Here are the most important updates that are effective as of July 1, 2026.
- The Graduate PLUS Loan program, which currently allows eligible graduate students to borrow up to the full cost of attendance, has been eliminated for new borrowers.
- New borrowing limits will go into effect.
- Only Two Repayment Plans will be available:
- A standard repayment plan, or
- An income-based repayment plan: Repayment Assistance Plan (RAP)
Federal Loan Options and Borrowing Limits
Current Student Borrowers
Who May Still Be Eligible to Borrow Graduate PLUS Loans After July 1, 2026? Legacy Provision:
Smith College SSW students enrolled in the 2026-2027 academic year as of June 1, 2026 and who had a federal direct loan disbursed prior to July 1, 2026 during their current program may continue to borrow:
- Federal Direct Unsubsidized Student Loan borrowing limit remains the same:
- Up to $20,500 for each academic year,
- Up to $138,500 aggregate total (includes both undergraduate and graduate student federal direct loan borrowed)
- Graduate PLUS Loan up to the cost of attendance less all other aid or loan awarded for each academic year.
Continued Grad PLUS Loan eligibility requirements:
- Graduate PLUS Loan eligibility applies only to the student's current program and degree level. Students will not be eligible to borrow Grad PLUS Loans after July 1, 2026 if they:
- Change degree level (for example, from a master's to a doctoral program),
- Change programs (such as law to business, or engineering to physics)
- Grad PLUS Loan eligibility is only for the remaining length of a student's current program, including time already enrolled (even if enrolled part-time).
- Students will lose any remaining Grad PLUS eligibility if they withdraw or take a leave from their program. Eligibility does not pause and resume.
New Federal Loan Borrowers after July 1,2026
For SSW students entering the program in the 2027-2028 and after, as well as, current SSW students who have not previously borrowed a federal loan during their current M.S.W. or Ph.D. program as of July 1, 2026:
- The Federal Direct Unsubsidized Student Loan borrowing limit remains the same at $20,500 per academic year. The lifetime borrowing maximum for graduate students will be $100,000.
- The Graduate Student PLUS Loan program has been eliminated
- All new federal student loan borrowers will have a lifetime borrowing maximum of $257,500 on all federal student loans borrowed
- Including those borrowed for undergraduate, graduate and professional programs
- Excludes Parent PLUS Loans borrowed (adult students who have borrowed Parent PLUS for their own children’s college education)
Federal Loan Repayment Options
- Borrowers will have only two repayment options:
- Standard repayment plan with fixed payment over 10-25 years, depending on the size of the loan.
- A new Repayment Assistance Plan (RAP).
All loans must be under the same plan. Borrowers with both pre- and post- July 1, 2026 loans must choose one of these two options: Standard or RAP.
- Can continue to enroll in plans existing before July 1, 2026
- May opt in to the new Repayment Assistance Program (RAP) or new tiered standard plan once available
- Borrowers enrolled in ICR, PAYE or SAVE plans will automatically be moved into RAP if they do not choose a new plan by July 1, 2028.
What You Can Do Now
- Review your loans. Log in to studentaid.gov to check your borrowing history and lifetime totals.
- Understand the transition rules. Borrowing before July 1, 2026, may allow continued access to current loan options for a limited time.
- Plan ahead. Your enrollment and borrowing dates may affect which rules apply to you.
- Think about repayment. Compare existing repayment plans with the new options to anticipate future payments.
- Budget carefully. With lower federal loan limits for some students, consider exploring private loan options, outside scholarships, and other possible funding options.
- Stay informed. Student Financial Services will continue to provide updates as the Department of Education releases details.