Federal Loan Updates FAQs

The One Big Beautiful Bill Act (OBBBA), or H.R. 1, includes several changes to the regulations and limits for Federal Student Loans. These changes impact federal loan limits, elimination of the Grad PLUS loan program and changes to repayment options.

Below are some frequently asked questions surrounding those changes. Please note that in some cases, there is still more information that is expected to come from the Department of Education to clarify aspects of this new law. We are monitoring changes daily and will continue to update this FAQ page as additional information becomes available.

With the Grad PLUS loan program going away, what alternative funding options can i be considering now? 

Some options to consider are:

Can I opt out of the legacy student provisions to qualify for the new federal loan limits/caps?

No. Per federal statute and regulations, legacy students will be held to the current loan limits and will be eligible for Grad PLUS loans up to three additional years in their current program. You will not be permitted to opt out of the provisions in order to have the new federal unsubsidized loan caps apply.

How will a leave of absence (LOA) or academic suspension affect my federal aid eligibility? 

As currently proposed through federal regulations, it is understood that KCU students who are on a LOA (personal or administrative) or who are placed on academic suspension will lose their legacy student status. This applies to students who have not started classes in their current degree program again and taken out a new federal direct loan prior to July 1, 2026. You will not have the current federal loan caps and will not be eligible to apply for Grad PLUS loans. The new federal loan caps will apply to you.

How will my loan eligibility be affected if I plan to be enrolled less than full-time in a future academic year?

The new law requires annual loan amounts to be prorated in direct proportion to your enrollment status. This change is effective as of the 2026-27 academic year. Your eligibility will be determined based on the number of credits that a full-time student in your program is expected to take for the academic year.

Full-time status is defined as 9 or more semester credits per term for the anesthesiology assistant program. It is 9 or more semester credits per fall and spring term and 6 or more semester credits in the summer term for the biomedical sciences and biomedical sciences research programs. For the clinical psychology, dental, and medical programs, 6 or more semester credits per term are considered full-time.

Example: You are a biomedical sciences student enrolled in 6 credits for the fall term. In your program, you would be expected to take 9 credits or more each in the fall and spring terms to be considered full-time. Therefore, 18 credits during the fall/spring academic year. At 6 credits in the fall term (6/18), you would be eligible for 33.3% of the annual loan limit of $20,500 ($6,833) for the term. If you then enrolled in 9 or more credits for the spring term, your remaining eligibility for the year would be calculated as follows: 6 credits (fall term) + 9 credits (spring term) or 15/18 (5/6) of the annual loan limit ($17,083) minus the $6,833 received in the fall = $10,250 for the spring term.

Is Public Service Loan Forgiveness (PSLF) still available? 

Yes. There were no changes made to PSLF through the OBBBA. However, the U.S. Department of Education published new regulations on October 31, 2025, separately from the OBBBA. These regulations create new limitations on PSLF eligibility.

Effective July 1, 2026, entities that the Department of Education determines engage in illegal activities such that the organization has a substantial illegal purpose will no longer be qualifying employers for PSLF. Examples of illegal activities cited in the updated regulations include aiding and abetting violations of federal immigration laws, supporting terrorism, engaging in the chemical and surgical castration or mutilation of children in violation of federal or state law, engaging in the trafficking of children to another state for purposes of emancipation from their lawful parents in violation of federal or state law, and aiding and abetting illegal discrimination. The Department of Education will notify a borrower if it is determined that their employer no longer qualifies.

What changes are happening with loan repayment options? 

Under the OBBBA, borrowers who take out a new federal loan on or after July 1, 2026 will only be eligible for two repayment plan options:

·      New, Tiered Standard Repayment Plan – Fixed monthly payment for 10, 15, 20, or 25 years (number of years is based on the amount borrowed/owed)

·      Repayment Assistance Plan (RAP) – The plan has a maximum 30-year repayment period, at which point the outstanding balance is forgiven. The monthly payment is 1-10% of total adjusted gross income (AGI) for borrowers with AGIs greater than $10,000. The percentage increases by one percentage point per increment of $10,000 in AGI. For AGIs of $10,000 or less, the monthly payment is $10. If you are married and file federal taxes separately, your spouse’s AGI and number of dependents will not be included in the payment calculation. $50 will be taken off the monthly base payment per each dependent you have (monthly payment will still be no less than $10). For on-time payments that reduce the principal amount by less than $50, the Department of Education will make a principal payment up to the amount the borrower paid, minus what was applied to the principal or $50, whichever is less. There will be no cap on the monthly payment amount, even if it is higher than the standard repayment plan amount.

Borrowers with no new federal loans made on or after July 1, 2026 will continue to be eligible to enroll in the current Standard, Graduated, Extended, or current Income Based (IBR) repayment plans. They can also opt to enroll in the new Repayment Assistance Plan (RAP). Current borrowers enrolled in the Income Contingent Repayment (ICR), Pay As You Earn (PAYE), or Saving on a Valuable Education (SAVE) Plans must transition to a different repayment plan (current IBR, current standard, or RAP) by July 1, 2028. If no selection is made by that date, they will automatically be moved into RAP.

Note: It is highly encouraged for any borrower currently enrolled in the SAVE plan to be aware of the court rulings surrounding the plan, as well as the proposed settlement agreement that ends the plan. You can find more information on studentaid.gov.

How H.R. 1 Will Affect You Guides

Graduate Students | Dental Students | COM Students | PsyD Students

If you have further questions, please reach out to the KCU Office of Financial Aid:

[email protected]

(816) 654-7175 

To learn more about advocacy efforts and policy issues, please visit the following websites:

aacom.org/advocacy

adea.org/home/publications/adea-publications/advocate-newsletter

apaservices.org/advocacy/issues

cgsnet.org/policy-advocacy

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