On July 4, 2025, Congress passed the One Big Beautiful Bill Act (OB3). This controversial piece of legislation included cuts to Medicaid, SNAP benefits, clean energy initiatives and the Affordable Care Act. It also expanded large business tax breaks and increased border protection funding.
Several less publicized OB3 changes took effect July 1, 2026, as federal student loan rules changed significantly. For some new borrowers, this deadline represented lower loan limits, reduced loan amounts and a completely new repayment system. Borrowers who took out loans before this date, however, can remain under pre-OB3 guidelines if certain conditions are met.
“You have to have borrowed loans previously before July 1. You have to remain in the same program and with the same CIP code,” said Catherine Morgan, director of student financial aid at ETSU.
Students transferring schools may risk losing the pre-OB3 rules they initially borrowed under, while part-time students and those considering part-time enrollment must also understand loan guideline changes and how their enrollment status now affects their loans.
“Loans now are being prorated by credit hours. Under the old rules, a student only had to be enrolled in six credit hours towards their program of study,” Morgan said. “Now, under the new rules, if you’re borrowing and you’re only taking six credits, they’re prorating that amount for the semester based on your enrollment. So, you would not receive the whole $1,750 as a freshman for fall term.”
Switching to part-time status may also affect students’ future loan eligibility, Morgan said.
Borrowing limits have changed for full-time students as well. The new total lifetime limit is $257,500 with limits of $100,000 for graduate students and $200,000 for training professionals. These changes are significant; the graduate school limit alone represents a lifetime limit decrease of more than $30,000 under OB3.
“We have very, very, very few students who reach that limit,” Morgan said, referring to the new graduate school loan limit.
Additionally, graduate students will be affected by the elimination of Graduate PLUS loans, which previously helped cover gaps up to the full cost of attendance. Existing borrowers may continue with their Graduate PLUS loans as long as they remain in the same program of study, and the Graduate PLUS loan amounts will contribute to their greater aggregate lifetime limit.
Parent PLUS loans have also been significantly impacted by OB3 changes.
“Under old rules, students could borrow up to the cost of attendance under a Parent PLUS loan,” Morgan said. “Under the new rules, they can only borrow $20,000 per student per year, with a cap of $65,000 lifetime. That cap is not per parent, it’s together, but the same parents could borrow for different children.”
Pell Grant eligibility has changed under OB3 as well. Now, if a student’s Student Aid Index (SAI) is over $14,790, they are no longer eligible for a Pell Grant. However, Morgan said eligibility for Pell Grants can change every year regardless of OB3 changes, making these changes a bit different from the new student loan regulations.
Another significant change is loan repayment pathways. Previous repayment plans have been replaced with two options: Repayment Assistance Plan and Tiered Standard Plan. The ETSU Office of Financial Aid & Scholarships does not generally handle repayment plans but is available to direct students toward appropriate repayment plan resources.
“A lot of this can get very complicated, but we’re always here to support. If a student is having a problem understanding, or wrapping their head around, or doesn’t know what to do next, they can come talk to their personalized counselor. They can make an appointment, they can call, they can email. I think that’s really what this office is here to do,” said Rachel Howard, enrollment marketing manager with University Marketing and Communications. “These people are the experts and are here to help.”
“We don’t want the students panicking and making decisions without asking questions, because it could impact them in the future; it could impact them next semester,” Morgan said. “Come talk to us, we will walk you through it.”
