Federal Financial Aid Changes

What You Need to Know

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law. This law introduced changes to higher education and federal financial aid programs. Some provisions went into effect immediately, while most changes will begin on Tuesday, July 1, 2026 or later.

Montclair State University is committed to helping you understand what is changing and what is not. This page will be updated as the U.S. Department of Education releases additional guidance.

Important Notice: Information on this page continues to evolve. For the latest federal guidance, monitor studentaid.gov.

Important Notice

The information provided reflects Montclair State University’s current understanding of federal financial aid changes under the One Big Beautiful Bill Act and is not intended to be legal advice. Many specifics, including transition rules, eligibility criteria and implementation timelines, are still subject to federal rulemaking and guidance from the U.S. Department of Education. Policies, processes and guidance are subject to change as new details emerge. If you have questions about your personal financial aid situation, contact Red Hawk Central directly.

Do I Need To Do Anything Right Now?

No action is required right now. Your loans and financial aid continue under current rules. Most changes will begin on Tuesday, July 1, 2026 or later and Montclair State University will provide updated guidance as details are finalized.

FAFSA Changes

Learn more about the upcoming changes to FAFSA.

What Is Staying the Same?

  • Pell Grant eligibility will be largely unchanged
  • Subsidized loans will remain available to undergraduate students
  • Current undergraduate annual and aggregate loan limits will remain in place
  • Federal Work-Study will be unchanged
  • Public Service Loan Forgiveness (PSLF) will continue, including counting residency and internship time toward forgiveness

What Is Changing Starting Tuesday, July 1, 2026?

FAFSA Form Changes for the 2026–27 Aid Year
 Starting with the 2026–27 FAFSA, certain assets do not need to be reported.

Excluded Items Include

  • Current net worth of a family-owned business with fewer than 100 full-time employees
  • Net worth of farms where the family resides
  • Net worth of family-owned and controlled commercial fishing business assets and related expenses

Grants and Loan Changes

Learn more about the upcoming changes to grants/loans.

Federal Pell Grant Eligibility Changes

Effective Tuesday, July 1, 2026, Pell Grant changes include:

  • The foreign earned income exclusion will be added to the adjusted gross income when calculating Pell eligibility
  • Students receiving nonfederal scholarships or grants covering the full Cost of Attendance will be ineligible to receive Pell funding
  • Students with a Student Aid Index (SAI) equal to or greater than twice the maximum Pell award for the year will be ineligible for Pell funding (limited exceptions apply)

Example: If the maximum Pell amount for 2026–27 is $7,395 and a student has an SAI of 14,790 or greater, the student will not be eligible for a Federal Pell Grant.

Limited Exception: A limited exception applies for dependents of deceased service members and safety officers.

Federal Student Loan Changes

Loan funding amounts will be prorated for less than full-time enrollment. If you are enrolled less than full-time, you will be eligible for a reduced amount of loan funding. Enrollment status is determined by degree applicable coursework.

A $257,500 lifetime borrowing cap will be established on all federal student loans (undergraduate, graduate and professional), excluding Parent PLUS.

Federal Parent PLUS Loan Changes

Beginning July 1, 2026, new Parent PLUS loan borrowers may borrow up to $20,000 per year and $65,000 in total per dependent student.

Students who were enrolled in a program of study on or before Monday, June 30, 2026, and who received a Direct Loan disbursement for that program before Tuesday, July 1, 2026, are eligible to have a parent borrow under the prior Parent PLUS loan rules for up to three academic years or through the remainder of the student’s expected time to degree completion whichever is shorter.

Federal Graduate PLUS Loan Changes

The Graduate PLUS program will be discontinued as of Tuesday, July 1, 2026.

Students who were enrolled in a program of study as of Monday, June 30, 2026, and had a Graduate Plus Direct Loan disbursed for that program of study prior to Tuesday, July 1, 2026, can continue to borrow under the previous loan limits for three academic years or the remainder of their expected time to degree completion, whichever is less.

Federal Direct Unsubsidized Loan Limits

Only applicable for graduate and professional students.

Effective Tuesday, July 1, 2026:

  • Graduate (Non-Professional): $20,500 annual, $100,000 aggregate
  • Professional Degree: $50,000 annual, $200,000 aggregate

Legacy limits will apply for loans before Tuesday, July 1, 2026.

Loan Repayment Changes

The OBBBA replaces most existing income-driven repayment plans with a new framework.

Income-Driven Repayment Plans Being Eliminated

  • Pay As You Earn (PAYE)
  • Saving on a Valuable Education (SAVE)
  • Income-Contingent Repayment (ICR)

Your options are not changing right away. You can continue using:

  • 10-year Standard Repayment Plan
  • 10-year Graduated Repayment Plan
  • 25-year Extended Repayment Plan
  • Pay As You Earn (PAYE)
  • Income Contingent Repayment (ICR)
  • Income Based Repayment (IBR)

You can remain on these plans until 2028.

Important: Borrowers must switch to a new eligible plan by July 1, 2028.

You will have two repayment options:

Standard Repayment Plan

  • Fixed monthly payments
  • 10–25 year repayment period

Repayment Assistance Plan (RAP)

  • Payments set at 1% to 10% of adjusted gross income
  • $10 minimum monthly payment if income is under $10,000
  • Remaining balance may be forgiven after 30 years

Key Timeline Reminders

  • 2025–26 Aid Year: Current rules apply
  • Tuesday, July 1, 2026: Most changes begin
  • By Tuesday, July 1, 2028: Repayment plan transition required

Frequently Asked Questions

Please view Frequently Asked Questions if you are in need of support.

General FAQs

No. If you are currently receiving aid or are in repayment, your loans and grants remain under their present terms for now. Most changes apply starting on July 1, 2026. Montclair State University is monitoring federal guidance and will update this page as details are finalized.

If you are currently enrolled and participating in student and or parent loan programs at Montclair State University, there are no changes to the aid you have already received.

If you or your parent borrowed a student loan for a term that begins before Tuesday, July 1, 2026, you may be eligible to borrow under the previous loan limits. If you are a graduate student, you may borrow additional Graduate PLUS Loans under the previous loan limits to finish your current program of study or for three years, whichever is shorter.

To be eligible for previous loan limits, including Graduate PLUS, you must be continuously enrolled in your current program of study. If you take a leave of absence or go on academic pause, you will be considered a new borrower subject to the new loan limits. You will also be considered a new borrower if you temporarily stop attending your current program of study to enroll in and or complete another program.

Starting in 2026–27, annual loan amounts will be prorated based on enrollment status. Further guidance from the Department of Education is expected.

If you have borrowed up to the aggregate federal loan limits under current rules, you may not be eligible for additional Federal Direct Loans unless the new law raises the limits for your situation. Further guidance is still pending. Montclair State University will provide updates after new rules are finalized.

Yes. PSLF remains in place and eligible borrowers can continue to work toward forgiveness. Further details on how PSLF will interact with the new repayment framework are subject to pending rulemaking.

Undergraduate Students and Families

Annual loan limits remain $5,500 to $12,500 based on year in school and dependency status. Aggregate loan limits remain $31,000 to $57,500. Undergraduate loans will now count toward the new lifetime limit of $257,500.

Yes, but starting in 2026–27, limits apply: $20,000 per year and $65,000 lifetime per student.

No. Work-Study eligibility remains unchanged.

Graduate and Professional Students

Graduate PLUS Loans are being phased out beginning July 1, 2026. Continuing students may be eligible for legacy borrowing provisions.

Professional programs typically lead directly to licensure (e.g., law, medicine, pharmacy). Most master’s and PhD programs are classified as graduate programs

  • Graduate assistantships
  • Private loans
  • Employer-sponsored benefits
  • Payment plans
  • External scholarships

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