Understanding the One Big Beautiful Bill Act (OB3)

Effective July 1, 2026, Graduate PLUS loans are no longer available to new graduate and professional student borrowers.  Current borrowers who qualify for the “interim exception,” also known as legacy status, can continue to borrow the Graduate PLUS loan until they complete their program or for a maximum of 3 years or until they reach Expected Time to Credential (ETC). 

The interim exception, also referred to legacy status, is a period of time after July 1, 2026, when you might be eligible for direct loans under the pre-OBBA loan limits. You may be considered a ‘legacy student’ if you meet all the following:

• Continue to be enrolled in the same program as of June 2026, attending the same school AND
• Are currently borrowing or previously borrowed a Direct Unsubsidized Loan while enrolled in this program AND
• Have no future lapse of enrollment (including withdrawal or LOA) as of 7/1/26 until you complete the program AND
• Do not change programs

If the Office of Financial aid established your interim exception eligibility criteria and you qualify for legacy status, please be aware there are conditions that may result in losing that status. You will lose your status, if you: 

• Temporarily withdraw from your program or take a leave of absence or withdraw from all coursework. Returning to the same program does not restore your legacy status. 
• Complete your program of study
• Change to a new program. This also includes if you are enrolled in a joint degree program and transition into the separate program of your joint degree after July 1, 2026, you will be considered a new borrower.  We strongly encourage you to complete the program you were enrolled in as of June 30^th, 2026, before transitioning to a new program. 
• Reached your expected time to credential. 

You will no longer qualify for the Graduate PLUS loan and become subject to the new loan limits which could result in the loss of all federal aid eligibility. 

The expected time to credential specifically applies to legacy students and determines the amount of time legacy students remain eligible for the interim exception.  It’s defined as the lesser of 3 years or until a student reaches the expected time to program completion.

To determine the ETC, the standard published program length (for full-time students regardless of enrollment) less any term the student was enrolled.

This student would be eligible for one remaining semester of legacy status in Fall 2027. The semester which they were not enrolled in (Fall 2024) does not count against the 4-year program length. However, the semester they went on a LOA (Fall 2025) does count against remaining ETC. 

Once a student reaches their ETC, they will no longer be considered a legacy student, be subject to the new loan limits, and no longer have access to the Graduate PLUS loan. 

With the elimination of the Graduate Plus loan, Federal Direct Unsubsidized loans are the primary source of federal funding. The new Graduate and Professional Direct Unsubsidized Loan limits are:

• Graduate annual limit: $20,500; lifetime (graduate/professional only): $100,000
  • Professional programs: annual $50,000; lifetime (graduate/professional only) $200,000
  • In addition to your program’s specific annual and lifetime limits, OB3 established a new combined lifetime limit of $257,500 for all federal loan borrowed during a student’s academic career. The limit applies to all Direct and Federal Family Education Loan (FFEL) program types such as subsidized loans, unsubsidized loans, PLUS loans for Graduate or Professional students regardless of any amount repaid, discharged, cancelled or forgiven. 

As of July 2026, some of the provisions of the U.S. Department of Education (ED)'s definition of a professional degree have been temporarily paused. ED has issued guidance that temporarily defines Physician Assistant (PA) and Physical Therapy (PT) as professional programs. New borrowers enrolled in these programs may qualify for the professional degree loan limit during litigation. Legacy borrowers are not eligible for consideration of the higher loan limits. While accessing these elevated annual and aggregate loan limits offers immediate financial flexibility, there is some potential risk that should be carefully considered. Students who borrow at the higher professional limits may exceed loan limits if the programs revert to a graduate-level classification. Exceeding these caps may restrict or eliminate eligibility in future semesters. New borrowers enrolled in the PA or DPT program who wish to borrow the higher professional loan limit should contact the Office of Financial Aid.

Beginning with the 2026-2027 academic year, all students regardless of degree type or whether borrowers qualify for the interim exception are subject to the schedule of reduction formula. This means if you are enrolled less than full time, your annual loan limit must be reduced proportionately. Students who are considering dropping or withdrawing from a course should contact the Office of Financial Aid for further guidance. We may be required to adjust your federal direct loans should you reduce your credit load, which could result in a balance owed.

You may want to consider a private educational loan in addition to your Federal Direct Loan. You may review lender options through ELMSelect. We encourage students to review each lender's criteria, including penalties, interest rates, fees, repayment terms, creditworthiness requirements, and satisfactory academic progress requirements.