The Beautiful Bill Act, passed by Congress, introduces several changes to the Free Application for Federal Student Aid (FAFSA) in the 2026-27 aid year. These changes affect all current and prospective students.
The Office of Student Financial Aid (OSFA) and Integrated Enrollment Marketing (IEM) are working with several other departments to provide details about these changes to students, faculty, and staff as they become available.
What's changing
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For student eligibility using the Student Aid Index (SAI), the exemption of family farms, family-owned fisheries, and small businesses (no more than 100 full-time employees that are owned and controlled by family) assets will be reinstated.
For students applying for the Pell grant;
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If a student has an SAI that exceeds twice the maximum Pell amount, they are ineligible to receive the Pell grant.
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Foreign income is now included in the Adjusted Gross Income used to calculate Pell Grant eligibility.
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If a student receives a scholarship or grant that fully covers the cost of college attendance, they are now ineligible for the Pell grant.
Parent Plus Loans
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Can only borrow up to $20,000 per year per dependent student
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In total, you can only borrow up to $65,000 per dependent student (without regard to amounts forgiven, repaid, canceled, or discharged)
Graduate Plus Loan
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New borrowers as of 2026-2027 cannot get the Graduate Plus loan.
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Current graduate student borrowers of the Graduate Plus Loan can still use their loans. Still, they can only borrow up to $20,500 per year with a cap of $100,000 overall.
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Current Professional student borrowers of the Graduate Plus Loan can still use their loans. Still, they can only borrow up to $50,000 annually with a cap of $200,000 overall.
For all loans they cannot exceed cost of attendance
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There is a lifetime borrowing cap of $257,500 on all federal student loans except the Parent Plus loan.
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If you are a non-full-time student, your loans will be prorated. For example, if you are a half-time student, you will now only receive half of your loan.
Federal Direct Loan Program
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Repayment plan options for New Borrowers: Borrowers can only repay using two plans: a new standard repayment plan with fixed monthly payments and fixed terms ranging from 10 to 25 years, based on the amount borrowed and the new income-based repayment plan, Repayment assistance plan (RAP).
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Repayment plan options for current borrowers- can continue to be eligible to enroll in the current Standard, current income-based (IBR), Graduated, and Extended repayment plans, and could also opt into the new income-based repayment plan, 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,
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Repayment assistant plan monthly payments calculations—Borrowers who either don't have an Adjusted Gross Income (AGI) or whose AGI doesn’t reasonably reflect the borrower's current income are required to provide the Department of Education (ED) with documentation to calculate their monthly payments.
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Repayment Assistance Plan monthly payment amount - the law requires a minimum of $10 monthly payment under RAP, and a borrower's RAP monthly payment will be based on their AGI and number of dependents. Income and dependents are calculated separately for married borrowers who file taxes separately from their spouses.
How Can I Help Students and Stakeholders Prepare?
Encourage students to create the necessary FSA ID(s) for their FAFSA.
Students can start the process by creating their FSA ID today.
Importantly, all those who qualify as a “contributor” to a student’s FAFSA must also create an FSA ID. This can include:
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The student
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Parents and co-parents (if the student are dependent)
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Spouse (if the student is independent and filed separate tax returns)
FSA IDs are created on the Federal Student Aid website.
Staying Up to Date
OSFA and IEM will communicate consistently about these changes throughout the 2024-25 aid year via the FAFSA Simplification page and additional outreach, including email campaigns to prospective and current students, faculty, and staff.