Important Update: Changes to Federal Student Aid (One Big Beautiful Bill Act)

The federal One Big Beautiful Bill Act (OBBBA), introduces significant updates to how federal financial aid and student loans are calculated and repaid. If you are planning to borrow student loans for the 2026–2027 academic year or later, please review these critical updates carefully. LDCC is considered a "Header" school for financial aid purposes. This means our academic award year officially begins with the summer semester rather than the fall (the aid year runs Summer -> Fall -> Spring).  These changes are effective beginning Summer 2026.

A student's enrollment will be checked before each loan disbursement. If a student drops below full-time after receiving a loan payment, that payment may not change. However, future loan payments could be reduced.

General Information

The annual and lifetime limits for standard undergraduate student loans remain unchanged ($31,000 total for dependent students; $57,500 for independent students). However, how those loans are distributed and repaid is changing.

How Summer Enrollment Affects Your Financial Aid

Under the One Big Beautiful Bill Act's proration rules, federal student loans are distributed dynamically based on your total yearly credit hours. Because LDCC is a "Header" school for financial aid purposes, our academic award year begins with the summer semester. This means any loan funds you choose to borrow for summer classes are drawn upfront from your fixed annual loan limit, which will directly reduce and prorate the remaining loan amounts available to cover your tuition for the following fall and spring terms.  

Direct Loan Proration for Part-Time Students

Previously, as long as you were enrolled at least half-time (6 credit hours), you could generally access your full annual federal student loan limits.

What’s Changing: Beginning July 1, 2026, federal Subsidized and Unsubsidized Direct Loans will be strictly prorated based on your exact credit hour enrollment. If you are enrolled less than full-time (fewer than 12 credit hours), your maximum loan eligibility will be reduced proportionally to your course load.

Important Note: If you plan to balance work and school by taking a part-time schedule, your available loan funding will be lower than in previous years. Please connect with a Financial Aid Advisor to map out your budget.

New Limits on Parent PLUS Loans

For students who rely on a parent to borrow on their behalf to cover educational expenses:

New Annual Limit: Capped at $20,000 per year per dependent student.
New Lifetime Limit: Capped at a maximum of $65,000 per dependent student.
Enrollment Impact: Parent PLUS loan amounts will also be prorated if the student is enrolled less than full-time.
These limits apply per student, regardless of whether one or both parents are borrowing.

Legacy Provision: If your parents borrowed a Parent PLUS loan for you prior to July 1, 2026, they may continue to borrow up to the full Cost of Attendance (minus other aid) for up to three academic years, or until you complete your current degree, whichever comes first, provided you maintain continuous enrollment.

Changes to Pell Grant Eligibility

The algorithm for the Federal Pell Grant has been adjusted. Students are no longer eligible to receive a Pell Grant if their Student Aid Index (SAI) from the FAFSA exceeds twice the maximum Pell Grant Award ($7,395 for the 2026–2027 academic year).

New Repayment & Forbearance Options

When you graduate or leave school, your repayment landscape will look different:

The Repayment Assistance Plan (RAP): A new income-driven repayment option will replace older legacy plans. RAP caps monthly payments between 1% and 10% of your Adjusted Gross Income (AGI), with a minimum payment of $10/month, and offers loan forgiveness after 30 years.

Sunsetting Deferments: The traditional Economic Hardship Deferment and Unemployment Deferment are being eliminated for new loans disbursed on or after July 1, 2027.

Strict Forbearance Limits: Forbearance (temporarily pausing payments) will be restricted to a maximum of 9 months every 2 years for all new loans.

What Should You Do Next?

Submit Your FAFSA Early: The FAFSA remains the mandatory starting point for all federal grants and loans.

Review Your Academic Plan: Because part-time enrollment now lowers your loan eligibility, changing your credit load from semester to semester will dynamically change your financial aid package.

Talk to Us: If you are unsure how loan proration will impact your out-of-pocket costs, please schedule an appointment with the Financial Aid Office.