Facebook pixel OBBBA Information | Pepperdine University Skip to main content
Pepperdine University

OBBBA Information

The One Big Beautiful Bill Act (OBBBA), which was signed into law on July 4, 2025 introduces significant changes to federal student aid programs. 

The information below reflects the most current guidance available but is subject to change.  This page will be updated as additional guidance becomes available.

Changes that take effect on July 1, 2026:

Current Loan Borrowers

Currently enrolled Pepperdine students that have a federal student or federal parent loan disbursed prior to July 1, 2026 for a period of enrollment that begins before July 1, 2026:

Undergraduate

Federal Direct Subsidized and Federal Unsubsidized student loan borrowing limits remain unchanged.

Federal Direct Parent PLUS Loan Legacy Provision – If a student or parent borrower has a federal loan disbursed before July 1, 2026, while the dependent student is enrolled in a program of study that begins before July 1, 2026, the parent can continue to borrow under current loan limits (Cost of Attendance – other Financial Assistance) through their student’s current program of study until program completion or for 3 academic years, whichever is less.

Graduate/Professional*

The Federal Direct Unsubsidized student loan borrowing limit remains unchanged.

Federal Direct Graduate PLUS Loan Legacy provision – If a borrower has a federal loan disbursed before July 1, 2026, while enrolled in a program of study that begins before July 1, 2026, the borrower can continue to borrow under current loan limits (Cost of Attendance – other Financial Assistance) through their current program of study until program completion or for 3 academic years, whichever is less.

New Loan Borrowers

New Pepperdine students, or students that change academic programs, that borrow their federal student or federal parent loan for periods of enrollment beginning on or after July 1, 2026.

Undergraduate

Annual Federal Direct Subsidized and Federal Unsubsidized student loan borrowing limits remain unchanged.

Federal Direct Parent PLUS loan - $20,000 per year cap per dependent student and a $65,000 aggregate limit per dependent student. 

Graduate/Professional

Graduate/Professional Federal Direct Unsubsidized loan limits

  • $20,500 annual limit for graduate students, $50,000 for professional students.
  • Aggregate limit - $100,000 for graduate students, $200,000 for professional students.
  • Does not include amounts borrowed as an undergraduate.

*A professional student is a student enrolled in a program of study that awards a professional degree, as defined under section 34 CFR 668.2. Examples of a professional degree include but are not limited to Pharmacy (Pharm.D.), Dentistry (D.D.S. or D.M.D.), Veterinary Medicine (D.V.M.), Chiropractic (D.C. or D.C.M.), Law (L.L.B. or J.D.), Medicine (M.D.), Optometry (O.D.), Osteopathic Medicine (D.O.), Podiatry (D.P.M., D.P., or Pod.D.), Theology (M.Div., or M.H.L.) and Clinical Psychology (Psy.D. or Ph.D.).

Federal Direct Graduate PLUS loan – program eliminated effective July 1, 2026. 

Undergraduate/Graduate/Professional 

Lifetime borrowing cap on all Federal loans - $257,500 (excludes borrowed Federal Parent PLUS loan amounts in the case of a dependent student who had Parent PLUS borrowed on their behalf for educational expenses). 

Loan Limit Reduction for Less Than Full Time Enrollment

Starting with the 2026-27 award year, Federal loans for students who enroll on a less than full-time basis, will be required to be prorated in direct proportion to the percentage of full-time status the student is enrolled in for the academic year.

Repayment Plan Options

Borrowers with any new loan disbursed on or after July 1, 2026 will only have the option to repay using two new plans:

  1. New standard repayment plan with fixed monthly payments and fixed terms ranging from 10 to 25 years based on the amount borrowed.  4 fixed terms of 10, 15,20, or 25 years based on the amount borrowed (or outstanding balance if in repayment).
  2. New Income-based repayment plan (RAP).  If married filing separately, spouse’s AGI and number of dependents are not included in the payment calculation.  $10 minimum payment.  Monthly payment is 1-10% of income based on AGI.  $50 off monthly payment (base payment) per dependent.  30-year repayment period.  Eliminates negative amortization.  No cap on monthly payment.  If a borrower makes an on-time payment that reduces their principal by less than $50, ED will make a payment to the principal, up to the amount paid, minus what was applied to the principal or $50, whichever is less.

Borrowers with no new loans made on or after July 1, 2026 can continue to be eligible to enroll in the current Standard, Graduated, Extended, or current Income Based (IBR) repayment plans.  May also opt in to the new RAP.  May also switch between, enter or remain on existing IDR plans until July 1, 2028.  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.

Repayment Options for Parent PLUS Loans

  • All new Parent PLUS loans from July 1, 2026 on must be repaid under the standard repayment plan, they are not eligible for RAP.

Repayment Options for Consolidation Loans

  • Consolidation loans made on or after July 1, 2026, are only eligible for the RAP or standard repayment plans.

Need Analysis

FAFSA Asset Exemptions – Effective with the 2026-27 award year – Reinstates the exemptions of family farm and a family-owned small business assets from the SAI calculation and expands asset exemptions to family-owned commercial fisheries.  

Foreign Income and Pell Eligibility – Requires that foreign income be included in the AGI used to calculate Pell Grant eligibility.

Full Cost of Attendance Scholarships/Grants – Students who receive grants or scholarships from non-federal sources covering their entire cost of attendance (COA) are ineligible to receive a Pell Grant, even if otherwise eligible for the program.

Students with High Student Aid Index (SAI) – Prevents students from receiving Federal Pell Grants if their SAI exceeds twice the maximum Federal Pell Grant award.