Financial Aid and Scholarships

Source: https://financialaid.ucdavis.edu/loans/federal-loan-update Parent: https://financialaid.ucdavis.edu/loans/undergraduate/ParentPLUS

Federal loan updates for 2026-27

Changes to federal student loans

Enacted in July 2025, the One Big Beautiful Bill Act, or OBBB, made significant changes in federal student loan programs as a part of the shifts in fiscal policy. While there are no changes to federal student loans for the 2025–26 academic year, changes resulting from the legislation are slated for July 1, 2026.

UC Davis is continuing to track all of these changes and plans to update this site as more clarification from the Department of Education is released. In the meantime, please note:

There are no changes to financial aid for the 2025–26 academic year, stemming from this legislation.
Students starting graduate school before July 1, 2026, may still be eligible for Graduate PLUS Loans under current rules. Specific guidance on this transition is expected but not yet available.

Important disclaimer: The information contained on this page is provided under a good-faith understanding of the evolving federal standards; it is not official guidance and should not be regarded by students as definitive. Students should refer to federal governmental sources for official guidance. Seestudentaid.govfor more information.

Learn how the OBBB Act is shaping the future of student borrowing and how the OBBB affects you.

Graduate students |Parents of dependent students |How to prepare |Repayment |Resources

Graduate students

What we know

Graduate PLUS loans

Graduate PLUS loans will be eliminated for new borrowers beginning on July 1, 2026; beginning on that date, new loans will not be available for new borrowers.
There will be some continuing eligibility for existing Graduate PLUS borrowers as they complete their current programs.

New graduate unsubsidized direct loan limits (effective July 1, 2026)

Professional programs (e.g., medicine, law, veterinary medicine):
Annual limit: Increased to $50,000
Aggregate limit: Capped at $200,000 (includes loans borrowed as an undergraduate)
Other graduate programs:
Annual limit: Remains $20,500
Aggregate limit: Capped at $100,000 (includes loans borrowed as an undergraduate)
Existing Unsubsidized loan borrowers can access unsubsidized loans under the current limits until completing their current program or for three additional years, whichever is less.

Legacy provision (grandfathering)

You may continue to borrow under the current rules (including Graduate PLUS loans up to the Cost of Attendance) for up to three additional years if you meet BOTH of the following criteria:

You are enrolled in the same credentialed program in 2026–27 that you were enrolled in prior to July 1, 2026.
You borrowed a federal student loan (Subsidized, Unsubsidized, or Graduate PLUS) for that specific program before July 1, 2026.

If you change programs or start a new degree after July 1, 2026, you will be subject to the new limits.

Loan proration for part-timers

The bill includes a provision to prorate loan amounts based on enrollment.
This could mean that part-time graduate students (e.g., those enrolled at less than full-time) would be eligible for only a portion of the annual loan limit.
We are awaiting clarification from the Department of Education on how this will be applied to both graduate and undergraduate students.

What remains unclear

What is considered a “professional” vs. “graduate” program?

Definitions and eligibility for higher borrowing caps available to students in “professional” programs are to be determined by the Department of Education, including how dual degree students will be treated.
However, the definition remains vague, with phrases like “not limited to” and “generally requires licensure.” In the months ahead, the Department of Education will need to confirm which programs qualify for the higher $50,000/year and $200,000/lifetime borrowing cap.

Graduate PLUS loans for existing borrowers

It's uncertain if current students who remain eligible for Graduate PLUS loans after July 1, 2026, can choose to decline Graduate PLUS to access the new $50,000 unsubsidized loan cap.
It’s uncertain, but the current indication is that a student who borrows any Direct Loan or Graduate PLUS before July 1, 2026, will remain eligible to borrow a Graduate PLUS loan for the “three-year or until program completion” window so long as that student remains in the same program at the same school for which they borrowed the pre-July 1, 2026 loan.
Awaiting further guidance from the Department of Education.

Parents of dependent undergraduate students

What we know

Undergraduate limits and Parent PLUS loans

There are no changes for undergraduate loans, although undergraduate loans will count towards the new lifetime limits.
However, starting July 1, 2026, Parent PLUS loans will be capped at $20,000 per student per year, with a $65,000 lifetime limit per dependent student.
Existing Parent PLUS borrowers who have borrowed for their students before July 1, 2026, can continue with the current limits for three additional years or until the student’s program ends.

Legacy provision for parents

Parents may continue to borrow under the current rules (up to the full Cost of Attendance) for up to three additional years if:

The student they are borrowing for is enrolled in the same program they were attending prior to July 1, 2026.
The parent borrowed a Parent PLUS loan for that student before July 1, 2026.

How to prepare

We understand these changes may create uncertainty as you plan for future years. Here are steps you can take now:

Check your loan history: Log in to StudentAid.gov to view your current total loan balance.
Understand your status: Determine if you will likely qualify for the Legacy Provision. If you are currently enrolled and have borrowed federal loans, you generally will.
Plan for the gap: If you anticipate your costs will exceed the new federal limits (especially for new graduate students or parents), begin researching private student loan options or preparing personal savings.

We are here to help you. Please reach out to us if you have any questions.

Repayment

Public Service Loan Forgiveness, or PSLF

No changes to PSLF provisions, although new limitations on eligibility have been proposed separately from the OBBB in other regulatory action.

New repayment plans

For new loans disbursed after July 1, 2026, the bill eliminates current income-driven repayment plans (IBR, PAYE, SAVE) and replaces them with a new Repayment Assistance Program, or RAP.
Students who have borrowed loans before July 1, 2026, and will borrow a new loan after July 1, 2026, are limited to the new RAP or the standard plans for the new loan.
RAP borrowers will not be locked into a 30-year plan. They can switch to a standard plan, which ranges from 10 to 25 years.
Borrowers with no new loans made on or after July 1, 2026, can continue to be eligible to enroll in the current Standard, current Income Based, or IBR, Graduated, and Extended repayment plans, and could also opt in to the new RAP. Current borrowers enrolled in ICR, PAYE, or SAVE plans must transition to a new repayment plan by July 1, 2028. If no selection is made by that date, they will be moved into RAP.
More information on the new RAP is forthcoming.

Additional resources

For additional resources published by Federal Student Aid, or FSA, please visit:

For up-to-date developments, visit the University of California Federal updates webpage.