Signed into law on July 4, 2025, the OB3 Act introduces reforms to higher education policies and changes how students will pay for education.
What does OB3 mean for students?
- The Federal Graduate PLUS Loan Program has been eliminated as of July 1, 2026. Graduate/Professional students will no longer qualify for the Federal Direct PLUS loans, limiting federal borrowing options. LMU’s newly admitted students whose program of study begins after July 10, 2026, will need to apply for private (alternative) loan funding to supplement the new reduced federal funding option. A grandfather/legacy clause was included in the act stating that students who have previously borrowed any Federal Direct Loans (Excluding Federal Parent Plus) while in the same program of study will be allowed to continue receiving PLUS loan funding until the end of their program, or up to 3 years.
Caveat: New students whose programs begin before July 10, 2026, are eligible to receive Federal Direct PLUS Loans, provided the loans are originated and disbursed prior to July 1, 2026. However, these students will only remain eligible for PLUS loans for a maximum of three (3) academic years. As a result, the final year of their professional program will need to be financed through private educational loans or other alternative funding sources.
- Changes to Aggregate Loan Limits: Professional students (DO/Dental/Law/Vet) have a new loan aggregate limit of $200,000 (including prior graduate borrowing). There is a Lifetime Aggregate Limit of $257,500 (including undergraduate borrowing).
Graduate students (Masters/OT/PT) have a new loan aggregate limit of $100,000 (including all graduate borrowing).
- Loan proration – The bill requires institutions to prorate annual loan amounts for any student who does not maintain full-time status throughout the academic year. The US Department of Education will be issuing further guidance in the next few weeks.
- Loan Repayment – The bill terminates all current student loan repayment plans for new loans disbursed on or after July 1, 2026. The Department of Education (ED) may only offer borrowers two options for repayment of federal student loans:
1. Standard Repayment Plan – Creation of a new standard plan with fixed terms of 10, 15, 20, or 25 years based on the amount borrowed (or outstanding balance if in repayment).
2. Repayment Assistance Plan – The new repayment option that counts toward Public Service Loan Forgiveness (PSLF) but has stricter eligibility rules.
Beginning on July 1, 2028, a borrower with a loan that is in a repayment status in accordance with, or an administrative forbearance associated with, an income-contingent repayment plan must begin repaying the loan under a new repayment plan. This applies to current borrowers who are on the following repayment plans: (1) the Saving on a Valuable Education (SAVE) plan, (2) the Pay as You Earn (PAYE) plan, or (3) the Income-Contingent Repayment (ICR) plan. If a borrower does not select a plan, ED must enroll the borrower in either the RAP or the standard repayment plan.
- Federal Parent PLUS Loan Program – New parent borrowers can click here and current parent borrowers can click here for new Parent PLUS Loan limits and details.
Please visit the links below for more information on the One Big Beautiful Bill Act:
