Navigating Federal Aid Changes
We know paying for college 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
Please Note: The One Big Beautiful Bill Act (OB3) was signed into law on July 4, 2025, and introduces significant changes to federal student aid. The information below reflects the most current guidance available as of 12/11/2025 and is subject to change. Smith College Student Financial Services (SFS) will continue to make updates regarding the scope and effect of these changes as we receive additional guidance. The Department of Education (DOE) is not expected to issue final regulations until mid to late spring in 2026.
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.
- Institutions will be required to prorate annual loan amounts in direct proportion to the percent of full-time status the student is enrolled.
- 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
If an active Smith College SSW student has borrowed a federal unsubsidized loan while enrolled in their current M.S.W. or Ph.D. program during the 2025-2026 or prior academic year, the student retains eligibility to apply for a GradPLUS under current loan limits for 3 academic years or the remainder of their expected time to credential, whichever is less.
- The annual 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 borrowers may continue borrowing annually up to the cost of attendance less all other aid or loan awarded for up to three academic years or until the end of their program, whichever comes first.
New SSW Student Borrowers for the 2026-2027 academic year beginning June 1, 2026*:
The SSW upcoming 2026-2027 academic year begins June 1, 2026. Students are billed on April 24, 2026 with payment due in full on May 15th. First disbursement of aid and loan/s is set for June 1st, 2026
Current guidance* indicates that a SSW student who is a new federal student loan borrower in the 2026-2027 academic year and has a federal loan made with first disbursement complete before July 1, 2026 will be able to apply for a GradPLUS for 3 academic years or the remainder of their expected time to credential whichever is less.
*Please Note: Current guidance will not be set until final regulations are issued by the DOE (expected mid to late Spring 2026). Students may need to research and plan for Private Student Loan borrowing if the Department of Education changes the current language upon issuing final regulations.
New Federal Loan Borrowers after July 1, 2026
The following applies to 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)
Loan Proration for Part-Time Enrollments
- The bill includes a provision to prorate loan amounts based on enrollment.
- This could mean that part-time graduate students (e.g., those enrolled less than full-time) would only be eligible for a portion of the annual loan limit. *SFS is awaiting further guidance.
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.