Important Federal Changes
The One Big Beautiful Bill Act (OB3) Impact on Federal Student Aid
This page is designed to help you understand what’s changing and how it may affect your Federal Student Aid options.
The One Big Beautiful Bill Act (OB3), signed into law on July 4, 2025, brings major changes to how students pay for higher education nationwide, including at UT Southwestern. Some parts of the law are already in effect, while others will begin on July 1, 2026.
The information we’ve provided reflects our current understanding of the new federal regulations. More detailed guidance from the U.S. Department of Education is expected on or before July 1, 2026, and we will update this page as new information becomes available.
Please contact our office with any questions regarding your financial aid.
- Federal Graduate PLUS Elimination for New Borrowers
Federal Graduate PLUS (Grad PLUS) loans are eliminated for new borrowers beginning July 1, 2026. Graduate and professional students will no longer be eligible for Grad PLUS Loans, which means federal borrowing options will be more limited for students starting new programs. If you are newly admitted and your program begins after July 1, 2026, you will need to explore alternative funding options, like private or state loans, to help cover any remaining educational expenses not met by federal unsubsidized loans.
Legacy Provision
OB3 includes a legacy (grandfather) provision to support current students. If you have previously borrowed a federal student loan in your current academic program, you may continue receiving Grad PLUS funding until you complete your current program, or for up to three academic years, whichever comes first.
Please note that changes to your academic path, such as a separation from the program, leave of absence, transfer to another institution, switching majors or degree levels, or other enrollment adjustments, may affect your eligibility for these legacy provisions.
If you are considering or anticipating any changes to your academic program or a separation from the university (even temporarily), please contact the Office of Student Financial Aid so we can help you understand how those updates may impact your borrowing eligibility.
Effective July 1, 2029, all student borrowing will be subject to the new OB3 limits and restrictions.
- Federal Direct Unsubsidized Loans Limits
Federal Direct Unsubsidized Loans Limits The bill sets new annual and aggregate loan limits. The following loan limits apply to all student borrowers who are not legacy borrowers under the federal unsubsidized student loan program:
- Medical & Clinical Psychology Doctoral Programs: $50,000 annual: $200,000 aggregate
- All other doctoral and master’s degree programs at UT Southwestern: $20,500 annual; $100,000 aggregate
- *Total for all graduate level borrowing: $200,000
Beginning July 1, 2026, there will be a $257,500 lifetime limit on all federal student loans combined. This lifetime cap applies across every program you have pursued or will pursue. Please note: this limit does not apply to Parent PLUS Loans, since those are borrowed by parents, not students.
Legacy Provision
You may borrow under the pre-OB3 limits if you have had a federal student loan disbursed before July 1, 2026, while enrolled in your current program of study. This legacy provision lasts for three years or until you complete your current program of study, whichever comes sooner.
Please note that changes to your academic path, such as a separation from the program, leave of absence, transfer to another institution, switching majors or degree levels, or other enrollment adjustments, may affect your eligibility for these legacy provisions.
If you are considering or anticipating any changes to your academic program or a separation from the university (even temporarily), please contact the Office of Student Financial Aid so we can help you understand how those updates may impact your borrowing eligibility.
Effective July 1, 2029, all student borrowing will be subject to the new OB3 limits and restrictions.
Please Note: Legacy borrowers may not opt-out of the annual limit legacy provisions even though the new borrower limits are higher.
- Federal Direct Loan Proration
Beginning July 1, 2026, federal loan limits will be prorated based on your enrollment level. This means that borrowers who are enrolled less than full-time will only be able to receive loan amounts that match the percentage of credits they are taking.
Important: You must be enrolled at least half-time to receive any federal student loan.
We’re still waiting on final guidance from the U.S. Department of Education about the exact proration amounts and how they will be calculated. We will update this information as soon as more details are available.
- Federal Direct Loans - Repayment
The bill terminates all current student loan repayment plans for borrowers with new loans disbursed on or after July 1, 2026.
The Department of Education (ED) will only offer those borrowers two options for repayment of federal student loans:- Standard Repayment Plan – a new standard plan with fixed terms of 10, 15, 20, or 25 years based on the amount borrowed (or outstanding balance if in repayment).
- Repayment Assistance Plan (RAP) – The new repayment option that counts toward Public Service Loan Forgiveness (PSLF) but has stricter eligibility rules.
Beginning on July 1, 2028, a borrower with a loan that is in a repayment status in accordance with, or an administrative forbearance associated with, an income-driven repayment plan must begin repaying the loan under a new repayment plan. This applies to current borrowers who are on the following repayment plans: (1) the Saving on a Valuable Education (SAVE) plan, (2) the Pay as You Earn (PAYE) plan, or (3) the Income-Contingent Repayment (ICR) plan. If a borrower does not select a plan, ED must enroll the borrower in either the RAP or the standard repayment plan.
- Frequently Asked Questions (FAQs)
What is the Legacy Provision?
The Legacy Provision allows students who received a Federal Direct Loan disbursement before July 1, 2026 and remain enrolled in the same credentialed program to continue borrowing under the current (pre‑OB3) annual and aggregate loan limits, and to have access to the Federal Graduate PLUS Loan.
Who qualifies for the Legacy Provision?
You may qualify if you received a Federal Direct Loan disbursement before July 1, 2026, and you remain enrolled in the same degree or certificate program.
How long does the Legacy Provision last?
Eligible students may continue borrowing unsubsidized and Grad PLUS loans under current limits for up to 3 academic years, or the remainder of the expected time to credential, whichever is shorter.
What academic changes could affect my eligibility for the legacy provisions?
Certain changes may remove you from legacy eligibility, including:
- Taking an unqualified leave of absence
- Separating or withdrawing from the program
- Transferring to another institution
- Changing majors or switching to a different credential
- Other enrollment or academic adjustments that alter your program status
What should I do if I’m planning to make an academic change?
Before making any changes, please contact the Office of Student Financial Aid. We can help you understand how your eligibility may be affected and discuss potential next steps.
Does this legacy provision apply to repayment options?
No. The Legacy Provision applies only to borrowing limits. Students who take out Federal Direct Loans after July 1, 2026 are subject to the new repayment rules, even if they qualified for legacy borrowing limits.
What should I do if I have more questions?
Reach out to our office. We understand how complex these changes are, and we are here to help.
Federal Resources
Please visit the links below for more information on the One Big Beautiful Bill Act.