One Big Beautiful Bill Act

The One Big Beautiful Bill Act, signed into law on July 4, 2025, includes several important changes to federal student aid, including the Federal Direct Student Loan Program. This bill affects the Federal Loan calculation, Federal Loan repayment, Parent Plus Loan repayment, and the Federal Pell Grant.

Important Disclaimer: The information provided here by DACC Financial Aid staff is intended to help students understand recent changes to federal student loan programs. While this information reflects our good faith understanding of evolving federal requirements, it is not official guidance and should not be considered final or authoritative. For official information and updates, students should refer to federal government sources, including Federal Student Aid at StudentAid.gov.

Student Loan Schedule of Reduction (Loan Proration)

Beginning with the 2026-27 academic year, the U.S. Department of Education (ED) will require annual Direct Loan limits to be prorated based on how many credits a student is enrolled in compared to full-time status. ED will also require annual eligibility to be recalculated based on any reduction in enrollment.

Previously federal student loans would disburse in full for students enrolled half time or more. Beginning July 1, 2026, students must be enrolled full time to receive their full loan offer, and the loans will be reduced for every credit below full time until a student is less than half time, at which point the entire loan will be removed.

What This Means for You

• If you are enrolled full time (12 or more financial aid–eligible credit hours), you may be eligible for up to 100% of the per-semester total
• If you are enrolled less than full time, your loan eligibility will be reduced based on your enrollment intensity. For example, if you are enrolled half-time (6 financial aid–eligible credit hours), you may be eligible for up to 50% of the per-semester total
• If you add, drop, or withdraw from classes, your semester or annual total may be adjusted
• If you drop or withdraw before your loan is disbursed, future semester loan amounts may be adjusted
• If you drop or withdraw after your loan is disbursed, your annual total may be adjusted

Additional guidance from ED regarding specific proration calculations and implementation is expected at a later date.

Federal Loan Schedule of Reductions (2026-27) - Dependent Students

Note: Amounts shown are examples based on equal enrollment each semester and are provided for illustrative purposes only. Final loan eligibility is subject to U.S. Department of Education guidance, which remains pending. Annual loan limits apply based on grade level and dependency status. Institutions may adjust loan amounts as needed to ensure annual limits are not exceeded. Based on individual eligibility, some students may qualify for less than the amounts shown above.

Federal Loan Schedule of Reductions (2026-27) - Independent Students

Note: Amounts shown are examples based on equal enrollment each semester and are provided for illustrative purposes only. Final loan eligibility is subject to U.S. Department of Education guidance, which remains pending. Annual loan limits apply based on grade level and dependency status. Institutions may adjust loan amounts as needed to ensure annual limits are not exceeded. Based on individual eligibility, some students may qualify for less than the amounts shown above.

All Federal Student Loans

Effective July 1, 2026, the One Big Beautiful Bill enacts a $257,500 lifetime borrowing limit on all federal student loans, total. This does not include Parent PLUS loans, which are borrowed by parents on their student’s behalf.

Legacy Provision

You may borrow under current loan limits if you have had a federal student loan disburse before July 1, 2026 while enrolled in a qualified program of study. This legacy provision lasts for three years or until you complete your qualified program of study, whichever comes sooner.

Parent Plus Loans

Beginning July 1, 2026, Parent PLUS loans will be capped at $20,000 per year with a $65,000 aggregate limit. Previously, Parent PLUS Loans had no cap and could be taken out for whatever amount was needed to get the student up to Cost of Attendance.

• These limits are per dependent student, meaning parents with multiple dependent students can take out these limits in total for each student.
• The number of parent borrowers does not change the limits, as they are tied to the student. So if a student has two parents who wish to borrow on their behalf, no more than $20,000 per year and $65,000 total may be taken out.

Legacy Provision

If a student has received a Parent PLUS Loan disbursement before July 1, 2026 while enrolled in a qualifying program, the parent borrower may continue borrowing Parent PLUS Loans under previous loan limits for three academic years or until the student completes their program, whichever is sooner.

Borrowers (including Parent Plus borrowers) who receive new federal student loans on or after July 1, 2026, will have access to only two repayment options: a new Standard Repayment Plan and a new income-driven repayment plan called the Repayment Assistance Plan (RAP). If a borrower does not actively select a repayment plan, they will be automatically placed in the new Standard Repayment Plan.

Standard Repayment Plan

• Fixed repayment terms of 10, 15, 20, or 25 years, based on the total amount borrowed
• Borrowers will be assigned to this plan if another option is not selected
• This plan is required for new Parent PLUS loans

Repayment Assistance Plan

• Monthly payment equal to 1–10 percent of income, based on adjusted gross income
• Minimum monthly payment is $10

Borrowers who do not receive any new loans on or after July 1, 2026, may continue to use the current Standard, Graduated, Extended, or Income-Based Repayment (IBR) plans. They may also choose to enroll in RAP. These borrowers may switch between, enter, or remain in existing income-driven repayment plans through July 1, 2028.

The following Pell changes take effect beginning July 1, 2026:

• Students meeting or exceeding their full Cost of Attendance with scholarship/waiver aid will not be eligible for any amount of Pell Grant.
  • This is a change from previous regulations, which allowed students in some circumstances to be fully funded with scholarship aid and still received their Federal Pell Grant on top.
• Students whose Student Aid Index (SAI) is at least two times the current Pell Grant maximum of $7,395 will not be eligible for the Pell Grant.

The Danville Area Community College Financial Aid Office will continue to monitor these changes and will provide updates as new information or official guidance from the U.S. Department of Education becomes available. Thank you for your patience as we work through these updates.

Resources

One Big Beautiful Bill Act Updates

(GEN-25-04) Federal Student Loan Program Provisions Effective Upon Enactment Under the One Big Beautiful Bill Act