Frequently Asked Questions About the One Big Beautiful Bill Act

No. Despite an earlier proposal to eliminate the in-school interest subsidy for undergraduate borrowers, there were no major changes to undergraduate student borrowing programs included in the bill.

Yes. As of July 1, 2026, parents will only be permitted to borrow up to $20,000 per year per child and $65,000 lifetime per child. These limits apply to all parents of a student, so the maximum amount a student may receive in a year is $20,000, and across all years is $65,000, regardless of whether one or more parents are borrowing on their behalf. This is a change from current law, which allows parents to borrow up to the full cost of attendance per child.

Yes. Currently, there are two primary federal graduate lending programs: the Grad PLUS program and the unsubsidized Stafford Loan program. As of July 1, 2026, the bill eliminates Grad PLUS borrowing – which currently allows graduate students to borrow up to the full cost of attendance for their program of study – and lowers unsubsidized Stafford Loan lifetime borrowing limits for graduate programs, effective July 1, 2026. Further details about the graduate loan annual and lifetime limits are included below. There is a new total lifetime limit across all loans of $257,500.

For graduate non-professional degrees, the new caps are:

• $20,500 annually; and
• $100,000

For graduate professional degrees, the new caps are:

• $50,000 annually; and
• $200,000 aggregate.

The Department of Education has never provided substantive guidance on what a “professional” program is. However, the regulations at 34 CFR 668.2 provide a definition and some examples of programs that qualify, although the list is not comprehensive.

According to the definition, a professional degree is:

A degree that signifies both completion of the academic requirements for beginning practice in a given profession and a level of professional skill beyond that normally required for a bachelor's degree. Professional licensure is also generally required.

The programs explicitly listed in regulation are:

• Pharmacy (Pharm.D);
• Dentistry (DOS, D.MD);
• Veterinary Medicine (DVM);
• Chiropractic Medicine (DC, DCM);
• Law (LLM, JD);
• Medicine (MD);
• Optometry (OD);
• Osteopathic Medicine (DO);
• Podiatry (DPM, DP, Pod.D); and
• Theology (M.Div, MHL).

The ten programs listed above are meant to illustrate types of professional degree programs. It is not an exhaustive list.

In addition to this list, there are “certain medical training programs” that currently qualify for up to $224,000 aggregate unsubsidized loan limits. This increased limit will be eliminated on July 1, 2026. These programs are divided into two groups:

Group 1 programs are eligible for an extra $20,000-$26,667 annually and include:

• Allopathic Medicine;
• Osteopathic Medicine;
• Dentistry;
• Veterinary Medicine;
• Optometry;
• Podiatry; and
• Naturopathic Medicine/Naturopathy.

Group 2 programs are eligible for an extra $12,000-$16,667 annually and include:

• Pharmacy;
• MA/Doctor of Public Health;
• Chiropractic Medicine;
• Clinical Psychology; and
• MA/Doctor of Health Administration.

Some of these programs qualify as professional programs under the new loan limits because they are explicitly named in the regulatory definition, but others may not. NAICU recommends reviewing your institution’s list of programs and identifying which meet the definition of “professional” programs described above. It is NAICU's understanding that programs that meet the definition of professional programs will continue to qualify for the higher loan limits that go into effect on July 1, 2026.

Although these programs and many others are likely to meet the regulatory definition of professional degree program in 34 CFR 668.2, they are not explicitly listed in the list of professional programs published by the Department of Education. Institutions should review their programs and determine whether they meet the definitional requirements in 34 CFR 668.2 for professional programs and students and decide whether to classify their programs as professional.

Yes. Examples include, but are not limited to, a Master of Divinity (M.Div) or a Master of Hebrew Letters (M.H.L) as described in 34 CFR 668.2.

Yes.

It is unclear at this time whether the Department will create a formal process to allow for the determination of professional degree programs not explicitly listed in 34 CFR 668.2. However, given the new weight of the definition of a professional program in 34 CFR 668.2, the Department will likely come under pressure to classify programs not explicitly listed in the regulation.

No. It's a distinction without a difference. 

The reconciliation bill provides a transition period for currently enrolled students that have received a Grad PLUS loan to continue accessing those loans for the lesser of three years or their remaining expected time to credential.

Based on NAICU’s reading of the bill, if a student receives a Grad PLUS loan by June 30, 2026, for the program they are currently enrolled in, they should be grandfathered into the transition period.

Beginning on July 1, 2026, the new total lifetime limit includes subsidized and unsubsidized loans borrowed but does not include Grad PLUS or Parent PLUS. More information is provided below regarding the transition for existing Grad PLUS borrowers.

The answer is not clear from the bill.  NAICU is awaiting clarification from Congress or the Department of Education.

Yes, based on NAICU’s understanding of the transition period language. At most, students who received a Grad PLUS loan by June 30, 2026, will have access to those loans for three more years. Beyond that, Grad PLUS will no longer be available.

If students are enrolled less than full-time, they will have a proportionate reduction in the amount they can borrow. For example, a student enrolled at 3/4 of full-time will be able to borrow a maximum of 3/4 of the loan limit for the program and credential level. As a result, an annual loan limit of $20,500 would become a loan limit of $15,375.

No. The final reconciliation bill does not include the House of Representatives’ proposal to impose risk-sharing payments on institutions. Instead, it establishes a new accountability mechanism dubbed “Gainful Employment for All.” 

Under the Gainful Employment for All mechanism, all higher education degree programs, except undergrad certificates, are analyzed to determine their worthiness for federal student loan eligibility. As a reminder, undergraduate certificate programs at private, nonprofit colleges and universities are subject to the existing gainful employment regulations and a different set of metrics.

Earnings of higher education program completers are compared to the earnings of high school graduates or bachelor’s degree recipients, depending on the program’s credential level, four years after completion. A program’s graduates must have median earnings greater than that of the comparison group’s median earnings to comply with the metric. Failing this test in one year leads to mandatory disclosures to enrolled students. Failing in two out of three years means that a program loses access to federal loans.

Only program completers who received Title IV aid are analyzed. If a student did not receive federal student aid, did not complete their program of study, or both, those students’ outcomes will not be considered in the program’s earnings statistics. 

A cohort of Title IV recipients who completed their undergraduate major is analyzed four years post-completion; the median earnings across the cohort for that major is found to be $50,000. The $50,000 metric is then compared to the median earnings of the cohort of 25–34-year-olds with only a high school diploma in the institution’s home state.

If the high school completer-only cohort’s median earnings are $35,000 and the undergraduate major’s earnings are $50,000, then the academic program will pass the new federal accountability metric. However, if the high school completer-only cohort’s median earnings are above the $50,000 metric, then the program would fail. If the higher education program fails, consequences could include the eventual loss of access to federal student loans.

The metric is nearly identical at the graduate program level, but the program’s earnings are not compared to those of a high school completer-only cohort, but instead to the earnings of 25–34-year-old bachelor’s degree completers in the institution’s home state.

Due to small cohort sizes and other data limitations, the new accountability metric contains some case-specific flexibility for computing the statistics.

No. Programs that fail the new accountability metric two out of three consecutive years would lose access to federal student loans for a period of at least two years. No other federal aid would be affected.

If a program were to fail the new metric in two out of three consecutive years, students enrolled in that program would be ineligible to receive federal student loans to pay for that program. The institution could not certify and disburse federal loans for those programs.

No. Earnings data for prior program graduates and comparison earnings for high school diploma and bachelor’s degree recipients will be gathered and calculated by the Department of Education, with help from the Census Bureau. The Department will provide the results of these calculations to institutions on an annual basis. There will be an appeals process available to institutions, as well.

Institutions should not have increased reporting requirements for this metric. The one caveat is that the negotiated rulemaking process that may happen before implementation could establish new reporting requirements, if necessary, so NAICU will be monitoring that closely.

For bachelor’s programs and below, the comparison will be to high school diploma recipients across all job categories. For graduate and professional programs, the earnings comparison will be the lesser of:

• A working bachelor's degree recipient aged 25-34 in their state;
• A working bachelor’s degree recipient aged 25-34 in their field of study in their state; or
• A working bachelor’s degree recipient aged 25-34 in their field of study in the entire country.

Earnings are calculated only for Title IV recipient graduates who are working. Non-Title IV completers and non-completers are not included. 

No. While there are several comparison groups under consideration for graduate and professional programs, the framework only considers the student’s field of study, not their current field of employment. 

The same standards apply to online learners, but if over 50% of enrollment at an institution is out of state, the earnings information will be compared at the national level, not the state level. 

No. The accountability framework only considers a program of study for earnings comparisons. There is nothing in the bill to provide consideration for professions at all, let alone specific professions. The accountability metric will be determined solely by the earnings comparison. At most, a program’s comparison group may be limited to those working in the same field as the program.

The programs most at risk of failing the accountability metric are those where the cost of the education exceeds early career earnings, particularly in the arts and people- or service-oriented fields, including, alternative medicine, fine arts/music/performing arts, mental and social health services, counseling, foreign language courses, anthropology, and certain education programs. 

No. These regulations are similar in name and purpose but differ in how they function and to whom they apply. Gainful Employment for All applies an earnings test to all higher education programs, except undergraduate certificates. Failing this test in two out of three years results in a program losing access to federal student loan programs for at least two years.

FVT-GE is a broad accountability framework that established reporting and disclosure requirements for public and nonprofit institutions’ graduate programs, as well as a two-tiered accountability test for public and non-profit undergraduate certificate programs and all for-profit programs. Failing either the earnings test or debt-to-earnings test in this framework in two out of three years results in a program losing access to all Title IV student aid programs for at least three years.

The FVT-GE reporting requirements are still in effect and due by September 30, 2025. The Department of Education released a reminder notice in July.

The bill provides $10.5 billion for the cumulative Pell Grant shortfall, shoring up the base funding for the program for the next two years. The bill also creates a Workforce Pell program for certain accredited short-term certificate programs.

The bill contains two eligibility changes: the elimination of Pell Grant eligibility for 1) students receiving scholarships that meet or exceed their full cost of attendance, and for 2) students whose Student Aid Index (SAI) is at least two times the current Pell Grant maximum of $7,395. As of FY25, that equates to an SAI of $14,790.

The Congressional Budget Office estimates that less than one percent of students meet or exceed these terms and those who do typically receive the minimum Pell Grant award. However, if the Pell Grant maximum were reduced, the two-times SAI ban would be similarly reduced, leading to more students losing eligibility.

No. The House proposed changing full-time eligibility for Pell from 12 credit hours to 15 credit hours per semester and eliminating less than half-time eligibility.

Due to the lack of clarity in the legislative language, NAICU ran three scenarios by congressional staff and asked whether or not they would violate the provision:

1. If a student has a cost of attendance (COA) of $10,000 and gets $5,000 in Pell and $5,000 in institutional grant aid, would that violate the provision?
   1. No.
2. If a student has a COA of $10,000 and gets $10,000 in a scholarship, would that violate the provision?
   1. Yes.
3. If a student has a COA of $10,000 and gets $5,000 in Pell and $9,999 in a scholarship, would that violate the provision?
   1. No, because the grant aid is, in total, lower than the student’s full COA.

In other words, if the law is implemented based on these assurances, if institutions or external grant aid sources changed the terms of their awards to be at least one dollar below a student’s full COA, the student would not lose access to Pell.

Lawmakers believe this language will only affect full-ride scholarship students, primarily those on athletic scholarships. They anticipate roughly 2,000 students will be affected by this prohibition.

Every student, athlete or not, who receives a full-ride scholarship that meets or exceeds their COA will lose access to Pell Grants for the terms they receive the scholarship. Their lifetime Pell Grant eligibility will also be reduced by an equivalent amount. Lawmakers anticipate that this will only impact a small number of the approximately 6 million students receiving a Pell Grant.

It is likely that the formal response to this question will be stated in a revised version of the Federal Student Aid Handbook; the FSA Handbook is updated annually and typically released in December or January for the upcoming financial aid award year. It is unclear whether the Department of Education will be able to incorporate such guidance into the FSA Handbook in time for the 2026-27 award year.

The Department of Education is finalizing the exact process to incorporate these changes into the Pell Grant award process. However, as of now, NAICU’s understanding is that the process will operate like this:

1. The student submits their FAFSA and gets an SAI and estimated federal student aid eligibility.
2. The Department sends the Institutional Student Information Record (ISIR) with that SAI, as well as the determination of Pell eligibility, based on the information the student submitted with their FAFSA (which does not include outside grants/aid).
3. The school reviews the ISIR to determine final federal student aid eligibility (as well as eligibility for other non-federal student aid funds). Once a school makes a final determination of a student’s eligibility, the school can award and disburse Pell through the normal drawing down of those funds from the Department.

Schools will continue to be the locus of disbursement and will need to understand the new rules of eligibility before deciding whether or not to award and disburse Pell.