Overview of H.R.1 Bill

Full-time Pell Grant definition: The law retains the definition of a full-time student at the current 12 credit hours per quarter.

Pell Grant for students enrolled less than half-time: The law maintains Pell Grant eligibility for students enrolled less than half-time.

Addressing the Pell Grant shortfall: The law adds about $10 billion in mandatory funding for the Pell Grant program for FY 2026. The expectation is that this will help to preserve the maximum Pell Grant amount at least at its current level for award year 2027.

Workforce Pell Grant program: The law creates a Workforce Pell Grant program, but excludes these grants from being available to remedial, non-credit, English language learning, or study abroad coursework. Unaccredited providers would be excluded from Work Force Pell eligibility. Note: UC Irvine does not currently offer any short-term workforce training and education programs that would be eligible for this program.

Pell Lifetime Eligibility Usage (LEU): The law states that students who receive grants or scholarships covering their entire cost of attendance (COA) would be ineligible to receive a Pell Grant, even if otherwise eligible for the program. There will be no impact to the Pell LEU for students in this situation.

Pell Grant Eligibility with a High SAI: The law includes a provision that prevents students from receiving Pell Grants if their SAI exceeds twice the maximum Pell Grant award, with an effective date of July 1, 2026.

Foreign Income and Pell Grant Eligibility: The law requires that foreign income be included in the income calculation for Pell Grant eligibility.

Annual, aggregate, and lifetime loan limits effective date: Loan limits become effective on July 1, 2026, with a legacy provision included for current borrowers to borrow under current limits for the remainder of their program of study.

Lifetime borrowing cap on all federal loans: The law contains a $257,500 borrowing cap on all federal student loans, excluding borrowed Parent PLUS loan amounts.

Parent PLUS loans: The law includes new Parent PLUS loan limits: a $20,000 per year cap per dependent student and a $65,000 aggregate limit per dependent student (without regard to amounts forgiven, repaid, canceled, or discharged).

Graduate PLUS loans: The law eliminates the Graduate PLUS program, with legacy provisions for current borrowers to complete their program of study. Note: Details on handling legacy provisions for current borrowers are still in progress.

Graduate loan limits: The law caps the annual graduate loan limits at $20,500 for graduate students and $50,000 for professional students. The aggregate limit is capped at $100,000 for graduate students and $200,000 for professional students.

Repayment plan options for New Borrowers: Borrowers with new loans made on or after July 1, 2026, can be repaid using only two plans: a new standard repayment plan with fixed monthly payments and fixed terms ranging from 10 to 25 years based on the amount borrowed and the new income-based repayment plan, the Repayment Assistance Plan (RAP).

Repayment plan options for Current Borrowers: Borrowers with no new loans made on or after July 1, 2026, can continue to be eligible to enroll in the current Standard, current Income Based (IBR), Graduated, and Extended repayment plans, and could also opt in to the new RAP. 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 Assistance Plan monthly payments calculation: Borrowers who either don’t have an Adjusted Gross Income (AGI) or whose AGI doesn’t reasonably reflect the borrower’s current income are required to provide the Department of Education (ED) with documentation to calculate their monthly payments.

Repayment Assistance Plan monthly payment amount: The law requires a $10 minimum monthly payment under RAP, and a borrower’s RAP monthly payment will be based on their AGI and number of dependents. Income and dependents are calculated separately for married borrowers who filed taxes separately from their spouses.

Income Based Repayment (IBR) plan changes: An earlier version of the bill proposed to remove the cap on monthly payments made under the IBR plan to no more than the borrower would have paid under the standard 10-year repayment plan, while the law retains the cap. The law also removes the requirement for borrowers to demonstrate a partial financial hardship in order to enroll in IBR. Additionally, the law retains cancellation for balances of loans repaid under IBR at 25 years.

Economic Hardship Deferment and Unemployment Deferment: The law eliminates the Economic Hardship Deferment and Unemployment Deferment for borrowers with an effective date for borrowers who received a loan on or after July 1, 2027. A borrower who receives a loan on or after July 1, 2027, may only be eligible for a discretionary forbearance for no more than 9 months during a 24-month period.

You can view the full analysis on the NASFAA news webpage here.

Here are some points to consider about the impacts of the H.R.1 Bill on your future financial aid planning. (Note: The law does not include any changes to undergraduate student loan limits and maintains the current limits for annual and aggregate borrowing.)

Loan Limits

• Current student borrowers will be allowed to borrow under current student loan limits.
  • To take advantage of the current limits for the remainder of your program, you should make a decision on borrowing your 2025–26 no later than May 1, 2026 and complete all other loan requirements before May 15, 2026.
• New Parent PLUS loan borrowers will be subject to new loan limits: A $20,000 per year cap per dependent student and a $65,000 aggregate limit per dependent student (without regard to amounts forgiven, repaid, canceled, or discharged).
  • These new annual and aggregate caps on Parent PLUS loans will limit the amount of federal loans that qualifying parents can take out to help pay for their child’s education.
  • To take advantage of the current limits, parents of current students should make a decision on borrowing Parent PLUS loans for 2025–26 no later than May 1, 2026 and complete all other loan requirements before May 15, 2026, if their anticipated needs exceed the new limits.
• All students will have a lifetime borrowing cap of $257,500 on federal student loans.
  • The cap excludes Parent Plus loan amounts; however, the law includes new limits to Parent Plus loans (see above).

Loan Repayment

• Current borrowers with no new loans made on or after July 1, 2026, can continue to be eligible to enroll in the current standard repayment plan.
  • To have the option of enrolling in the current repayment plans (or being able to opt in to the new, income-based Repayment Assistance Plan, RAP), current students who are not borrowing should make a decision on borrowing 2025–26 loans no later than May 1, 2026 and complete all other loan requirements before May 15, 2026.
  • New borrowers with loans made on or after July 1, 2026, will need to repay the loans through RAP or by using a new standard repayment plan with fixed monthly payments and fixed terms. (This will affect both current and prospective students who take out new loans.)

Pell Grants

• Pell Grants will remain available for current and prospective undergraduates—with some changes.
  • If you receive grants or scholarships covering your entire cost of attendance (COA), you will be ineligible to receive a Pell Grant, even if otherwise eligible for the program.
  • The law states that you will not be able to receive Pell Grants if your Student Aid Index (SAI) exceeds twice the maximum Pell Grant award, effective as of July 1, 2026.

For graduate students, the two major impacts of the bill on financial aid are 1) the elimination of the Graduate PLUS loan program and 2) caps on annual graduate loans.

• There are legacy provisions for current Graduate PLUS loan borrowers to complete their program of study.
  • To qualify under the legacy provisions, current graduate students who are eligible should make a decision on borrowing 2025–26 loans no later than May 1, 2026 and complete all other loan requirements before May 15, 2026.
  • New students who anticipate needing funding in excess of the new annual federal unsubsidized student loan limits will need to explore other financing options, including PACE payment plans and private loans, to help fund their studies.
  • Beginning with the 2026–27 academic year, annual graduate loan limits will cap at $20,500 for graduate students and $50,000 for professional students. The total amount of loans will be capped at $100,000 for graduate students and $200,000 for professional students.

The law does not directly alter eligibility for federal student financial aid programs like Pell Grants for eligible students in mixed-status families.

However, the law does include other changes that likely will impact mixed-status families, including imposing stricter eligibility requirements for other federal benefits and limiting access to Child and Educational tax credits to individuals with valid Social Security Numbers.

Parents without Social Security Numbers (SSNs) can still contribute to the FAFSA.