Federal Student Loan Changes Effective July 1, 2026
Quick Summary: What Is Changing?
- Federal Direct Subsidized and Unsubsidized Loans will be prorated for students enrolled less than full-time.
- Graduate PLUS Loans will be eliminated for new borrowers; some continuing graduate students may qualify for a limited exception.
- Graduate unsubsidized loans will have a new lifetime aggregate limit.
- Parent PLUS Loans will remain available but will have new annual and lifetime borrowing limits, with limited exceptions for current students.
Federal Direct Loan Proration for Less-Than-Full-Time Enrollment
Federal Direct Subsidized and Unsubsidized Loan eligibility will be reduced when a student is enrolled less than full-time for a semester. Full-time enrollment is generally 12 credit hours for undergraduate students and 6 credit hours for graduate and doctoral students. For example, a student enrolled in 9 undergraduate credit hours, or three-quarter-time enrollment, would be eligible for three-quarters of the loan amount for that semester.
Example 1: A student enrolled in 6 credits in the fall and 6 credits in the spring is enrolled at 50% each term. If the student would otherwise be eligible for $5,500 for the year, or $2,750 per term, the prorated loan amount would be reduced to $2,750 for the year, or $1,375 per term, to reflect half-time enrollment.
Example 2: A student begins the fall semester enrolled in 12 credit hours but withdraws from 6 credit hours after the loan has been disbursed. The student ends the fall semester at 50% enrollment and then enrolls full-time in 12 credit hours for the spring semester. If the student would otherwise be eligible for $5,500 for the year, or $2,750 per term, the spring loan amount may be reduced to $1,375 because the adjustment for the fall withdrawal is made during the spring semester.
*Examples are for illustrative purposes only. Individual student situations and aid impact may vary.
What this may mean for you: If you withdraw from or fail one or more courses after your aid has disbursed, your future loan eligibility may be reduced. Because each situation is different, contact Student Financial Services before withdrawing if you want to understand the possible financial aid impact.
Graduate PLUS Loan Elimination and New Graduate Loan Limit
The Federal Direct Graduate PLUS Loan program will be eliminated for new borrowers. A graduate student may qualify for a limited exception, sometimes referred to as being grandfathered, if all of the following criteria are met:
- The student was enrolled in the same program as of June 30, 2026.
- The student received at least one Federal Direct Loan disbursement for that program.
- The student maintains continuous enrollment and does not switch schools, change programs, or take a semester off.
As long as a continuing student meets these requirements, they may still be eligible to receive a Graduate PLUS Loan of up to $20,500 per year.
This exception is limited to up to 3 years or until the student reaches the program’s published time to credential, whichever comes first.
Example 1: A graduate student attended Indiana Tech during 2025-2026 and borrowed an unsubsidized loan for that program. If it was the student’s first year in a two-year program, the student may have one year of remaining Graduate PLUS Loan eligibility, up to $20,500, if all exception requirements are met.
Example 2: A graduate student is in the third year of a program because they have attended part-time. If the program’s published time to credential is two years, the student would not be eligible for additional Graduate PLUS Loan borrowing under the exception, even if they otherwise meet the exception criteria. Less-than-full-time enrollment does not extend the published time to credential.
*Examples are for illustrative purposes only. Individual student situations and aid impact may vary.
Graduate Direct Unsubsidized Loans have not been eliminated. However, graduate borrowers will have a new lifetime aggregate limit of $100,000. The annual maximum remains at up to $20,500.
What this may mean for you: Graduate PLUS eligibility depends on your program enrollment history, prior loan disbursements, continuous enrollment, and your program’s published time to credential. Contact Student Financial Services if you are a graduate student and want to know whether the limited exception may apply to you.
Changes to Parent PLUS Loans
Parent PLUS Loans will continue to be available, but new statutory borrowing limits will apply:
- New annual limit: Parents may borrow up to $20,000 per student, per year.
- New lifetime limit: Parents may borrow up to $65,000 total per student.
The $65,000 lifetime limit applies per student, not per parent.
Similar to the graduate student exception, Parent PLUS Loans may also have an exception for current students whose parent borrowed a Parent PLUS Loan for that student before June 30, 2026.
If the exception applies, the parent may be able to borrow more than $20,000 per year and may not be subject to the new aggregate cap for that student.
What this may mean for your family: If your parent plans to borrow a Parent PLUS Loan, the new annual and lifetime limits may affect how much can be borrowed. Families should contact Student Financial Services with questions about remaining eligibility, prior borrowing history, or whether an exception may apply.
Students Most Likely to Be Impacted
- Graduate and undergraduate students enrolled less than full-time.
- Graduate students who previously planned to use Graduate PLUS Loans.
- Graduate students who change programs, change schools, stop out, or attend beyond the published time to credential.
- Parents borrowing Parent PLUS Loans for dependent undergraduate students.
- Students who withdraw from courses, or fail them, after aid has already disbursed.
What Students and Families Should Do Next
- Review your enrollment plans for each semester, especially if you expect to attend less than full-time.
- Contact Student Financial Services before withdrawing from a course so you can understand possible loan impacts.
- Graduate students should ask whether the Graduate PLUS Loan exception may apply before making program, school, or enrollment changes.
- Parents considering a Parent PLUS Loan should review the new annual and lifetime borrowing limits.
- Keep your contact information current and monitor communications about financial aid and federal student loan updates.
- Reach out to Student Financial Services for questions about your specific eligibility, borrowing options, or next steps.
Frequently Asked Questions
Does this affect full-time students?
Full-time students may not be affected by the loan proration rule, but they may still be affected by other changes, such as Grad PLUS elimination, graduate aggregate limits, or Parent PLUS borrowing limits.
Can graduate students still borrow unsubsidized loans?
Yes. Graduate Direct Unsubsidized Loans remain available, but graduate borrowers will have a new lifetime aggregate limit of $100,000.
What happens if a student withdraws after aid is disbursed?
The student’s future loan eligibility may be reduced because the adjustment for the withdrawal may be made in a later semester.
Is the Parent PLUS lifetime limit per parent or per student?
The lifetime limit is per student, not per parent.
When to Contact Student Financial Services
Contact Student Financial Services if you have questions about your individual eligibility, remaining loan amounts, prior borrowing history, enrollment changes, or whether an exception may apply to you or your family. This is especially important before changing programs, stopping out, reducing your enrollment, withdrawing from courses, or making decisions about Graduate PLUS or Parent PLUS borrowing.
Important Note
This summary is intended for general informational purposes for students and families. Final eligibility is determined by federal regulations, institutional policy, and each student’s individual circumstances. Additional guidance may be provided as implementation details become available.