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2025 Key Changes to Federal Student Loans

Signed into law on July 4, 2025, the One Big Beautiful Bill Act (OBBB) made significant changes to federal student loan programs that begin July 1, 2026. There are no changes to federal student aid for the 2025 to 2026 academic year.

No changes apply to federal student aid for the 2025 to 2026 academic year. Beginning July 1, 2026, significant federal student loan changes are expected to affect loan availability, borrowing limits, and repayment options for many graduate, professional, and health professions students. This page explains what is changing, who may be affected, and what students should understand before making borrowing or enrollment decisions.

If you are unsure how these changes apply to your situation, contact the Office of Student Financial Aid before making enrollment or borrowing decisions.

What is changing

Beginning July 1, 2026, changes to federal law are expected to affect the amount many students can borrow, the types of federal loans available, and the repayment options available after graduation. For many students, the Graduate PLUS loan program will be eliminated unless they qualify for a limited exception. New Direct Unsubsidized Loan limits and caps will also apply, and repayment options will narrow for borrowers who take out a new federal Direct Loan on or after July 1, 2026.

Students should know the following:

  • Graduate PLUS loan availability: Beginning July 1, 2026, the Graduate PLUS loan program will be eliminated unless a student qualifies for a limited exception. Students who currently rely on Graduate PLUS loans should review the exception criteria carefully and speak the Office of Student Financial Aid if they have questions.
  • Borrowing limits: New Direct Unsubsidized loan annual, aggregate, and lifetime limits will apply beginning July 1, 2026. These limits vary based on student type and program classification. Some students will qualify for higher annual borrowing than others, while some will be subject to lower caps.
  • Repayment options: Borrowers who take out a new federal Direct Loan on or after July 1, 2026, will generally have only two repayment plan options: Tiered Standard Repayment and the Repayment Assistant Plan (RAP).

Borrowing changes by student type

Federal borrowing rules will not apply the same way to every student. The amount you may borrow through Direct Unsubsidized loans after July 1, 2026, depends on whether your program is treated as a graduate program, a professional program, or a health professions program with a specific federal loan classification.

Important Note: Federal loan treatment may depend on how a program is classified for Direct Loan purposes. Students who are unsure how their program is classified should contact the Office of Student Financial Aid for guidance.

Graduate Students

For graduate students, the annual Direct Unsubsidized Loan limit remains $20,500. Beginning July 1, 2026, a new $100,000 aggregate cap applies to graduate degree borrowing, and a new lifetime federal Direct Loan limit of $257,500 applies across all levels of study. This lifetime amount excludes Parent PLUS loans. Students who qualify for the limited exception may continue to access Graduate PLUS loans while the exception remains in effect.

Professional Students

For professional students, the annual Direct Unsubsidized Loan limit increases to $50,000. Beginning July 1, 2026, a new $200,000 aggregate cap applies to professional degree borrowing, and a new lifetime federal Direct Loan limit of $257,500 applies across all levels of study. This lifetime amount excludes Parent PLUS loans. Students who qualify for the limited exception may continue to access Graduate PLUS loans while the exception remains in effect. Under the exception, however, the current annual Direct Unsubsidized Loan limit of $20,500 remains in place.

Health Professions Students

For health professions students, borrowing limits depend on how a program is treated for federal Direct Loan purposes. Some health professions programs are treated as graduate programs, while others are treated as professional programs. As a result, some students will see higher annual and aggregate Direct Unsubsidized loan eligibility, while others will qualify for lower amounts. Students who qualify for the limited exception may continue to access Graduate PLUS loans while the exception remains in effect.

Health professions programs treated as graduate programs for Direct Loan purposes

The following MUSC programs are treated as graduate programs for Direct Loan purposes:

  • Master of Public Health
  • Master in Health Administration
  • Doctor of Health Administration

For students in these programs, the annual Direct Unsubsidized loan limit is $20,500 without the limited exception, the aggregate limit is $100,000 for graduate level borrowing, and the lifetime limit is $257,500 across all levels of study. Under the limited exception, the aggregate limit becomes $224,000 across all levels of study, and the lifetime limit is the same as the aggregate amount.

Health professions programs treated as professional programs for Direct Loan purposes

The following MUSC programs are treated as professional programs for Direct Loan purposes:

  • Doctor of Medicine
  • Doctor of Dental Medicine

For students in these programs, the Direct Unsubsidized Loan limit is $50,000 without the limited exception, the aggregate limit is $200,000 for graduate or professional level borrowing, and the lifetime limit is $257,500 across all levels of study. Under the limited exception, annual borrowing ranges from $40,500 to $47,167 based on academic year length, the aggregate limit becomes $224,000 across all levels of study, and the lifetime limit is the same as the aggregate amount.

Additional health professions programs with distinct annual ranges

The following MUSC programs are treated as professional programs for Direct Loan purposes:

  • Doctor of Pharmacy
  • Doctor of Pharmacy and Master of Science in Health Informatics
  • Doctor of Pharmacy and Master of Public Health - Generalist

For students in these programs, the annual Direct Unsubsidized loan limit is $50,000 without the limited exception, the aggregate limit is $200,000 for graduate or professional level borrowing, and the lifetime limit is $257,500 across all levels of study. Under the limited exception, annual borrowing ranges from $33,000 to $37,167 based on academic year length, the aggregate limit becomes $224,000 across all levels of study, and the lifetime limit is the same as the aggregate amount.

Limited exception for continuing students

Some students may continue to access Graduate PLUS loans after July 1, 2026, under a limited exception. The exception allows eligible students to continue borrowing through the Graduate PLUS loan program for up to three academic years through time to completion.

You may qualify for the limited exception if you:

  • remain continuously enrolled in the same program of study at the same institution as of June 30, 2026; and
  • had a Direct Loan disbursed for the same program before July 1, 2026.

What the limited exception allows

If you qualify, you may continue to borrow through the Graduate PLUS program for up to three academic years through time to completion, subject to the rules described in the source guidance for your student type. Professional students remain exempt from the new annual, aggregate, and lifetime limits, but the exception maintains the current annual Direct Unsubsidized Loan limit of $20,500 rather than the new $50,000 annual amount. For health professions students, the exception also preserves access to Graduate PLUS and applies the current Direct Unsubsidized Loan limits detailed in the source chart.

What ends the limited exception

The limited exception ends after three academic years, or earlier if you withdraw, cease enrollment, or complete your program of study. Once the exception ends, you will no longer qualify for Graduate PLUS loans.

Important details to consider

Taking out a federal student loan before June 30, 2026, may help some students preserve eligibility for the limited exception. However, borrowing only to lock in eligibility is not the right choice for everyone. Borrowing has long term consequences, so students should speak with financial aid before making that decision.For health professions students, limited exception eligibility cannot be forfeited. In other words, students who qualify cannot opt out of the exception in order to move to the new annual and aggregate borrowing structure.

Changes to repayment

Repayment changes apply to all borrowers who take out a new federal Direct Loan on or after July 1, 2026. Students who borrow a new federal Direct Loan on or after that date will generally be eligible for only two repayment plans.

  • Tiered Standard Repayment
    • Fixed monthly payments
    • Repayment term lengths ranging from 10 to 25 years, depending on the amount borrowed
  • Repayment Assistance Plan
    • Monthly payments based on income
    • Loan forgiveness after 30 years of repayment
    • Qualifying repayment plan for Public Service Loan Forgiveness (PSLF)

All federal loans must be repaid under the same repayment plan. Students who have older loans borrowed before July 1, 2026, but who take out a new federal Direct Loan on or after that date, will have to repay their federal loans under one of the two options listed above.

Students who do not borrow a new federal Direct Loan on or after July 1, 2026, may continue to access current repayment options, including:

  • Standard (10-year), Graduated, or Extended Repayment
  • Income-Based Repayment (IBR)
  • Pay As You Earn (PAYE)
  • Income-Contingent Repayment (ICR)

The law sunsets PAYE and ICR effective July 1, 2028. Borrowers enrolled in those plans must move into another eligible plan before that date or they will be automatically moved into RAP. Borrowers who do not take out a new federal Direct Loan on or after July 1, 2026, may also access RAP once it becomes available in July 2026.

Less than full-time enrollment

Beginning in the 2026 to 2027 academic year and future years, federal Direct Unsubsidized Loans and Graduate PLUS Loans, when available under the limited exception, must be prorated for students who enroll less than full time. Students who are considering part-time enrollment or dropping a class should speak with the Office of Student Financial Aid first so they understand how the change could affect their borrowing.

Other financing options

If you need to borrow more than you are able to through federal student loans, contact the Office of Student Financial Aid to discuss other financing options. Depending on your circumstances, options may include scholarships, payment plans, institutional loans, or private loans.

Important disclaimer

This information reflects MUSC’s current understanding of the One Big Beautiful Bill Act based on available federal guidance. It is not official federal guidance and may change as regulations and implementation details are finalized.

Additional resources

For additional resources published by Federal Student Aid (FSA) and national associations, please visit:

Frequently Asked Questions

Graduate PLUS loans will generally be eliminated beginning July 1, 2026. Some students may continue to borrow through Graduate PLUS if they qualify for the limited exception and remain eligible under its terms.

It may. The source guidance explains that taking out a federal student loan before June 30, 2026, could help some students keep access to Graduate PLUS loans and the applicable current borrowing structure under the limited exception. However, borrowing only to preserve eligibility may not be the right decision for everyone. Students should speak with financial aid before making that choice.

For health professions students, no. The source guidance states that limited exception eligibility cannot be forfeited. Students who qualify remain subject to the terms of the exception while it applies.

If you enroll less than full time beginning in the 2026 to 2027 academic year or later, your federal loan eligibility may be prorated. Because this can affect the amount you are able to borrow, contact the Office of Student Financial Aid before making schedule changes.

Students who need to borrow more than they can through federal student loans should contact financial aid to discuss alternatives such as scholarships, institutional loans, or private loans.

Contact the Office of Student Financial Aid

MSC 203
Harper Student Center
45 Courtenay Dr, Fl 3
Charleston, SC 29425-8917

Hours of Operation: Monday-Friday, 8:00 am-4:30 pm

Phone: 843-792-2536

Email: finaid@musc.edu

Visit the Student Portal to find your Financial Aid Advisor under Advisors.

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