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One Big Beautiful 兔子先生 Act: Federal Loan Changes

Passed in July 2025, the One Big Beautiful 兔子先生 Act (OB3) introduces significant changes to federal student loan programs. Federal student loan provisions included in OB3 have been enacted and are scheduled to take effect on July 1, 2026.

All details are subject to change pending the release of the final regulatory text, which is projected to be released in the first half of 2026. The final guidance from the U.S. Department of Education may further clarify definitions and implementation details. This page will be revised as new information becomes available.

Undergraduate Students

Federal Direct Student Loans

The annual Federal Direct Student Loan limit remains unchanged. Federal student loans have a combined lifetime borrowing limit of $257,500 across all levels of study. Within this total, students may borrow up to:

  • $57,500 for undergraduate study
  • $100,000 for graduate study and/or
  • $200,000 for professional programs

Note that this lifetime limit excludes Parent PLUS loans.

Federal Direct Parent PLUS Loans

New borrowers* will be capped at $20,000 per dependent student each year, with an aggregate limit of $65,000 per dependent student.

  • Legacy Provision: The law allows for a time-limited exception to new loan limits for currently-enrolled students. For Parent PLUS Loan borrowers to not be subject to the new loan limits:
    • The student must remain continuously enrolled in the same program of study at the same institution as they were enrolled as of June 30, 2026 AND 
    • The parent borrower must have had a Parent PLUS Loan disbursed for that same program before July 1, 2026 OR the student must have had a Direct Loan (subsidized or unsubsidized) disbursed for that same program before July 1, 2026. 
  • If the above requirements are met, the new Parent PLUS Loan limits do not apply while the student is completing their program, for up to three years, provided the student remains continuously enrolled (i.e., does not withdraw or otherwise cease enrollment outside of scheduled breaks or non-required terms).

Students who enroll part-time starting in 2026-27 must have their Federal Direct Subsidized and Unsubsidized Loans adjusted in accordance with changes to the law. This requirement does not apply to Parent PLUS Loans.

For information about additional loan options, visit our Private Loans page.

* Under OB3, a “new borrower” is generally defined as a student who did not borrow any type of Federal Direct Loan (Subsidized, Unsubsidized, or PLUS) for a specific program of study at the institution they are attending before July 1, 2026.

Graduate Students

Federal Direct Unsubsidized Student Loan

The annual Federal Direct Unsubsidized Loan limit remains unchanged at $20,500. A new aggregate limit of $100,000 (excluding undergraduate loans) has been established.

Federal student loans have a combined lifetime borrowing limit of $257,500 across all levels of study. Within this total, students may borrow up to:

  • $57,500 for undergraduate study
  • $100,000 for graduate study and/or
  • $200,000 for professional programs

Note this limit excludes Parent PLUS loans.

  • Legacy Provision: The law allows for a time-limited exception for currently-enrolled students if:
    • They remain continuously enrolled in the same program of study at the same institution as they were enrolled as of June 30, 2026 AND 
    • They had a Direct Loan disbursed (Direct Unsubsidized or Graduate PLUS) for that same program before July 1, 2026.
    • Students who meet the above requirements can continue borrowing without being subject to the new Direct Unsubsidized aggregate and lifetime borrowing limits under this limited exception through their time to completion, for a maximum of three years.

Federal Direct Graduate PLUS Loans

Beginning July 1, 2026, new borrowers* will no longer be eligible for the Federal Direct Graduate PLUS Loan.

  • Legacy Provision: The law allows for a time-limited exception for currently-enrolled students if:
    • They remain continuously enrolled in the same program of study at the same institution as they were enrolled as of June 30, 2026 AND 
    • They had a Direct Loan disbursed (Direct Unsubsidized or Graduate PLUS) for that same program before July 1, 2026.
    • Students who meet the above requirements can continue borrowing from the Graduate PLUS program without being subject to the new Direct Unsubsidized aggregate and lifetime borrowing limits under this limited exception through their time to completion, for a maximum of three years.

Students who enroll part-time starting in 2026-27 must have their Federal Direct Unsubsidized and/or Graduate PLUS Loans adjusted in accordance with changes to the law.

For information about additional loan options, visit our Private Loans page.

* Under OB3, a “new borrower” is generally defined as a student who did not borrow any type of Federal Direct Loan (Subsidized, Unsubsidized, or PLUS) for a specific program of study at the institution they are attending before July 1, 2026.

Student Loan Repayment Plan Changes

Borrowers who take out new Federal Direct Student Loans on or after July 1, 2026 will be eligible for two repayment plans:

1. Tiered Standard Repayment

  • Fixed monthly payments
  • Repayment term length ranges from 10 to 25 years based on the amount borrowed
2. Repayment Assistance Plan (RAP)
  • Monthly payments based on income
  • Loan forgiveness after 30 years of repayment
  • Is a qualifying plan for Public Service Loan Forgiveness

If a borrower with new loans does not select a plan, they will be assigned to the tiered standard repayment plan.

Students who have existing loans and do not borrow a new Federal Direct Student Loan on or after July 1, 2026 may continue to access current repayment options.

The law will sunset the PAYE and ICR plans on July 1, 2028. Borrowers who enroll in PAYE or ICR must switch to any of the other eligible plans listed before this date; otherwise, they will be automatically moved into the Repayment Assistance Plan (RAP). They may also access the new repayment options listed above once they become available in July 2026.

Parent Plus Repayment Plan Changes and Forgiveness Options

Comparison of Parent Plus Options by Borrowing Scenario
Borrowing Scenario Repayment Plan Options Forgiveness/Cancellation Options
Only borrowed Parent PLUS Loans before July 1, 2026
  • 10-year standard repayment plan
  • Extended repayment plan
  • Graduated repayment plan
  • Income-contingent repayment (ICR) plan*
  • Time-based forgiveness**
  • Public Service Loan Forgiveness**
Only borrowed Parent PLUS Loans on or after July 1, 2026 Tiered Standard Plan None
Borrowed Parent PLUS Loans both before and after July 1, 2026 Tiered Standard Plan None
Consolidated Parent PLUS Loans on or after July 1, 2026 Tiered Standard Plan None

* Only eligible for Income-contingent repayment (ICR) if consolidated into Direct Consolidation Loan and enrolled in ICR before July 1, 2026.

** Only the 10-year standard plan and ICR are eligible for forgiveness/cancellation options.

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