The One Big Beautiful Bill Act (OBBBA) and Financial Aid
In accordance with the recent reconciliation bill, the One Big Beautiful Bill Act (OBBBA), the Butler University Office of Financial Aid is providing important updates that will affect the financial aid of prospective and current Butler University undergraduate and graduate students.
Our financial aid staff are committed to helping students and families navigate these changes while staying informed of policy updates to ensure students receive the most accurate and up to date information and guidance. As the U.S. Department of Education releases guidance, Butler will continue to monitor changes and developments and share timely information with students and the campus community.
Student and Parent Loan Changes
All parents (combined) may borrow $20,000 per year per dependent student and a $65,000 aggregate limit per dependent student.
Legacy Provision: If a borrower has a Federal Direct Loan made before July 1, 2026, while the dependent student is enrolled in a credentialed program, the parent can continue to borrow under current loan limits for 3 academic years or the remainder of their dependent student’s expected time to credential, whichever is less, however the student must remain enrolled in the current plan of study.
Borrowers of the undergraduate subsidized and unsubsidized loans will not see any changes to eligibility or lifetime loan limits under the OBBBA.
Beginning in 2026-2027, the OBBBA reduces the amount of a loan that a student may borrow for an academic year if the student is enrolled in a program of study on less than a full-time basis during that academic year. This reduction in the annual loan limit will be made in direct proportion to the degree to which the student is not enrolled full-time, rounded to the nearest percentage point.
Starting July 1, 2026:
- Graduate students who are new borrowers may borrow up to $20,500 per year, with a lifetime limit of $100,000.
- Professional students (e.g., law and PharmD) may borrow up $50,000 per year in Unsubsidized Loans, with a lifetime limit of $200,000.
- If you have borrowed an Unsubsidized Loan in your current program of study, you will continue to qualify for the existing Unsubsidized Loan limits along with the Grad PLUS loan as long as you remain enrolled in that program of study. If you have also borrowed a Grad PLUS loan in your current or existing program of student for an additional three years or the end of your program or whichever comes first.
If you’re starting a new Graduate program before July 1, 2026, you may be eligible for the Grad PLUS under the current rules.
Important news for graduate student borrowers. Certain provisions of the law must still be clarified. The information below is what is interpreted of the changes as of today. Currently, there are no changes to the 2025-2026 academic year.
Grad PLUS Loans Are Being Phased Out
- Starting July 1, 2026, new borrowers will no longer be eligible for the Federal Direct Grad PLUS Loan.
- Exception: If you are enrolled in a current program and have borrowed a Grad PLUS before July 1, 2026, you will still be able to access a Grad PLUS loan for up to three additional years or until your program ends (whichever comes first) . This legacy provision only applies to loans borrowed for your current program. If you have borrowed a Grad PLUS for a previous program and start a new one after July 1, 206, you will not be eligible for the loan in your new program.
FAFSA Form & Pell Eligibility Changes
The following changes go into effect July 1, 2026. Changes will be applied to the 2026-2027 award year.
Beginning with the 2026–2027 award year, the Student Aid Index (SAI) asset calculation will exclude the following from current net worth of business and farms and should not be reported as assets on the FAFSA form:
- The net worth of a family-owned business with 100 or fewer full-time (or full-time equivalent) employees.
- The net worth of a farms on which the family resides.
- The net worth of a commercial fishing business and related expenses, owned and controlled by a family.
Effective July 1, 2026, students who receive grants or scholarships from non-federal sources covering their entire cost of attendance (COA) are ineligible to receive a Federal Pell Grant, even if otherwise eligible for the program.
Beginning with the 2026-2027 award year, the foreign earned income exclusion amount reported on the FAFSA form will be added to the adjusted gross income (AGI) when determining Federal Pell Grant eligibility.
Beginning with the 2026-2027 award year, an applicant with a Student Aid Index (SAI) equal to or greater than twice the maximum Federal Pell Grant award amount for the award year is ineligible for a Federal Pell Grant.
For the 2026–2027 award year, this threshold is $14,790.
This limit does not apply to students who qualify for a Federal Pell Grant under the Special Rule (dependents of certain deceased service members and Public Safety Officers).
Repayment Options for Borrowers
The new law introduces several important changes to student and parent loan repayment.
New Income-Based Plan: The Repayment Assistance Plan (RAP)
- RAP monthly payments are calculated based on Adjusted Gross Income (AGI).
- $10 minimum monthly payment is required, and a borrower’s RAP monthly payment is based on their AGI and number of dependents.
- Income and dependents are calculated separately for married borrowers who filed taxes separately from their spouses.
Borrowers who don’t have an AGI or whose AGI doesn’t reasonably reflect the borrower’s current income are required to provide the U.S. Department of Education (ED) with documentation to calculate their monthly payments.
A standard repayment plan with fixed monthly payments and fixed terms ranging from 10 to 25 years based on the amount borrowed.
Eligible to enroll in the Standard, Income-Based (IBR), Graduated, and Extended repayment plans, or can opt in RAP.
Those enrolled in the Income-Contingent Repayment (ICR), Pay As You Earn (PAYE), or Saving on a Valuable Education (SAVE) plans must transition to a new repayment plan by July 1, 2028. If no selection is made by that date borrowers will be moved to RAP.