Stafford Loan
Federal Loan Changes Effective for the 2026-2027 Academic Year
The One Big Beautiful Bill Act (OB3 or OBBBA), passed in July 2025, made significant
changes to federal student and parent loan regulations, with the legislation scheduled
to go into effect with the 2026-2027 academic year.
Disclaimer: We are awaiting official guidance from the US Department of Education; however, the Office of Student Financial Aid has provided a summary below of how this law may impact student financial aid beginning in the 2026-2027 academic year. The information presented reflects our good faith understanding of evolving federal loan regulations. It is not an official or binding statement of policy and is subject to change once official guidance is available.
Students are encouraged to consult studentaid.gov for federal government resources and publications for official guidance.
Key Changes at a Glance
Loan Proration for Less than Full-time Enrollment
- Loan amounts will be prorated for all students enrolled in less than full-time.
- Full-time for graduate students is 9 credit hours per semester.
- Full-time for undergraduate students is 12 credit hours per semester.
- Students enrolled less than half-time remain ineligible for federal loans.
- Dropping courses or withdrawing during the Fall semester could reduce Spring loan eligibility.
Borrowing Limits for Graduate Students
- The annual loan limit for graduate students remains unchanged at $20,500.
- The new lifetime graduate loan limit will be $100,000, but it will no longer include amounts borrowed as an undergraduate.
- Existing unsubsidized loan borrowers will remain subject to the current lifetime limit of $138,500 (including undergraduate loans) for up to three academic years in their current program OR the remainder of their expected time to credential, whichever is less.
Graduate PLUS Loans
- Grad PLUS loans are being phased out beginning July 1, 2026. Loans after that date will not be available to new borrowers.
- There is a legacy provision for existing graduate borrowers, allowing for grad PLUS loans for up to three academic years in their current program OR the remainder of their expected time to credential, whichever is less.
Parent PLUS Loans
- For new borrowers after July 1, 2026, Parent PLUS loans will be capped at $20,000 per student per year. The lifetime limit will be $65,000 per student.
- There is a legacy provision for existing Parent PLUS borrowers to continue with the current limits for three more years or until the student’s program ends.
- Changing majors does not affect Parent PLUS loan eligibility.
New Federal Student Loan Repayment Plans
- There is a new standard repayment plan and a new income-based repayment plan (RAP).
- Several existing payment plans will be eliminated.
- For more information, please visit studentaid.gov.
How to apply for a Federal Direct Loan
To apply for a Federal Direct Loan you must complete the FAFSA. You can apply for a loan if you are enrolled at least half time and meet other eligibility requirements set by the government.
We offer Federal Direct Loans as part of your award package. You may accept, reduce, or turn down (via E-Services) the amount you wish to borrow.
E-sign the Federal Direct Loan Master Promissory Note (MPN)
To receive a Federal Direct Loan you must complete a Federal Direct Loan Electronic Master Promissory Note (eMPN) before we can give you your money. Once you complete the Federal Direct Loan eMPN and the loan is in your student account, you do not have to sign a Federal Direct Loan eMPN again (it is valid for 10 years).
To complete the eMPN, go to the Federal Student Aid website. You will need your U.S. Department of Education PIN to sign your eMPN electronically. After you sign your eMPN, they will notify us electronically. We cannot give you your loan money until you complete your eMPN and, if this is your first loan, complete Entrance Counseling.
Federal Direct Loan Entrance Counseling
If you are taking out your first loan, the federal government requires you to have loan counseling before you receive your money. Entrance Counseling explains how the student loan program works, including repaying and interest, and outlines your rights and responsibilities. You will check your knowledge by answering questions at the end of each section.
You must answer all the questions correctly to complete Entrance Counseling successfully and get your loan. Go to the Federal Student Aid for your counseling. You will need your U.S. Department of Education PIN for Entrance Counseling. After you complete Entrance Counseling, the results are sent electronically to UHCL. We recommend you print a copy of the rights and responsibilities page for your records.
Receiving Loan Funds
When we hear from the Federal Direct Loan Processor that they have a valid eMPN on file for you and you have completed Entrance Counseling, your Federal Direct Loan is automatically credited to your student account if you meet the other Federal eligibility requirements (starting about a week before classes begin each semester).
Request Reduction or Cancellation of Federal Direct Loans
You can reduce or cancel your Federal Direct Loan offer. You may do so in E-Services, or you may notify us in writing (via your UHCL outlook email or snail mail).
Federal Direct Loan Limits
The Federal government limits the amount of money you can borrow. If you have filed the FAFSA, we award you the maximum amount eligible under such limits. The annual limit applies to the most you can borrow in one academic year, while the total limit applies to the maximum a student can borrow in a lifetime. If you are not eligible for subsidized loans, which are need-based, those amounts can be added to unsubsidized loan amounts shown below.
Annual and Total Limits for Federal Direct Loans
Dependent Students
| Student Type | Subsidized | Unsubsidized | Annual Limit | Total Limit |
|---|---|---|---|---|
| Freshman | $3,500 | $2,000 | $5,500 | $31,000 |
| Sophomore | $4,500 | $2,000 | $6,500 | $31,000 |
| Junior or Senior | $5,500 | $2,000 | $7,500 | $31,000 |
Independent Students
| Student Type | Subsidized | Unsubsidized | Annual Limit | Total Limit |
|---|---|---|---|---|
| Freshman | $3,500 | $6,000 | $9,500 | $57,500 |
| Sophomore | $4,500 | $6,000 | $10,500 | $57,500 |
| Junior or Senior | $5,500 | $7,000 | $12,500 | $57,500 |
Graduate and Professional Students
| Unsubsidized | Annual Limit | Total Limit |
|---|---|---|
| $20,500 | $20,500 | $138,500 |
Interest Rates for Direct Loans
First Disbursed on or after July 1, 2025 and prior to June 30, 2026
| Loan Type | Borrower Type | Index | Add-On | Fixed Interest Rate |
|---|---|---|---|---|
| 10-Year Treasury Note | ||||
| Direct Subsidized Loans | Undergraduate Students | 4.342% | 2.05% | 6.39% |
| Direct Unsubsidized Loans | Undergraduate Students | 4.342% | 2.05% | 6.39% |
| Direct Unsubsidized Loans | Graduate/Professional Students | 4.342% | 3.60% | 7.94% |
| Direct PLUS Loans | Graduate/Professional Students and Parents of Dependent Undergraduate Students | 4.342% | 4.60% | 8.94% |
Federal Direct Loan Exit Counseling
The federal government requires that you go through Exit Counseling prior to leaving or graduating from college. To complete Exit Counseling, go to the Federal Student Aid website. You will need your U.S. Department of Education FSAID to complete Exit Counseling.
During Exit Counseling you will learn about the circumstances under which you can reduce or postpone your payments, and how to get the necessary forms. Even though you have a six-month grace period, the Exit Counseling process will help you set up a repayment plan, a direct withdrawal and a payment date.
Federal Direct Loan Repayment
Repayment of Federal Direct Stafford Loans begins 6 months after you graduate or are not enrolled at least half time.
Additional Federal Direct Loan Information
Contact Federal Direct Loan Servicing Center at www.studentaid.gov or call them at 1-800-557-7394.