Important Federal Loan Changes Coming In 2026
What Current and Prospective Students Need to Know
Update for Prospective Students
Beginning July 1, 2026, major federal changes will limit how graduate students can finance their education—making now the best time to secure access to current loan options. The Graduate PLUS Loan program will be eliminated for new borrowers, and federal Direct Loan limits will be capped at $100,000. However, students who enroll and begin borrowing before July 1, 2026 will be grandfathered into the existing, more flexible programs—retaining access to Graduate PLUS Loans that can cover the full cost of attendance, along with current loan limits and repayment options through June 30, 2029 (or until program completion).
Update for Current Students
Effective July 1, 2026
Significant changes to federal student loans were recently enacted through the One Big Beautiful Bill Act (OBBBA). These changes will affect how graduate and professional students finance their education beginning on July 1, 2026.
Please review this message carefully, as it outlines how the new rules may apply to you.
Important Notes:
The information below reflects the most current guidance available but is subject to change. We will continue to keep you informed as additional guidance becomes available.
Graduate and Professional Students*
Students enrolled in most master’s degrees and academic phD programs are considered
Graduate students.
A Professional student is a student enrolled in a program of study that awards a professional degree. Examples of a professional degree include but are not limited to Pharmacy (Pharm.D.), Dentistry (D.D.S. or D.M.D.), Veterinary Medicine (D.V.M.), Chiropractic (D.C. or D.C.M.), Law (L.L.B. or J.D.), Medicine (M.D.), Optometry (O.D.), Osteopathic Medicine (D.O.), Podiatry (D.P.M., D.P., or Pod.D.), Theology (M.Div., or M.H.L.) and Clinical Psychology (Psy.D. or Ph.D.).
Key Changes
1. Elimination of the Graduate PLUS Loan Program: Beginning July 1, 2026, the Federal Graduate PLUS Loan program will be discontinued for new borrowers.
Legacy Provision: Graduate and Professional students who have a Graduate PLUS Loan disbursed before July 1, 2026 and continue to be enrolled at Pepperdine GSEP in the same program may continue borrowing $20,500 of Direct Unsubsidized Loans and Graduate PLUS Loans up to the full cost of attendance through June 30, 2029 or until the end of their program, whichever comes first.
2. New Annual and Aggregate Loan Limits for New Borrowers AFTER June 30, 2026: Students who have not received a Direct Unsubsidized Loan disbursement before July 1, 2026 (“new borrowers”), will be subject to the following new Direct Unsubsidized Loan limits:
Annual and Aggregate lifetime limits (does not include amounts borrowed as an undergraduate):
Graduate Students: $20,500 annual; $100,000 aggregate
Professional Students: $50,000 annual; $200,000 aggregate
A separate lifetime limit of $257,500 applies to all federal student loans (excluding Parent PLUS loans borrowed on your behalf)
Note: Graduate PLUS Loans will NOT be available to new borrowers after July 1, 2026.
Legacy Provision: Students who received an Unsubsidized Direct Loan and a Graduate PLUS Loan prior to July 1, 2026, and remain enrolled in the same program at Pepperdine GSEP can continue borrowing the current Unsubsidized Direct Loan amount of $20,500 and Graduate PLUS Loans up to the full cost of attendance until June 30, 2029 or program completion, whichever is sooner.
3. Proration of Loans Based on Full-Time or Part-Time Enrollment: Beginning July 1, 2026, new borrowers enrolled less than full-time will only be able to borrow an amount proportional to their enrollment status. Further guidance from the U.S. Department of Education is expected.
What This May Mean for You
Pepperdine GSEP’s Office of Financial Aid does not encourage or discourage borrowing. However, we are committed to equipping you with the information and support you need to make sound financial decisions.
Here are some scenarios that may apply to you:
1. If you are a Pepperdine GSEP student and you have borrowed or will be borrowing Graduate PLUS Loans for the 2025-26 Academic Year: You are covered under the legacy provision and may continue borrowing Graduate PLUS Loans up to the full cost of attendance through June 30, 2029, or the end of your current program, whichever comes first.
2. If you are a Pepperdine GSEP student who has not yet borrowed a Direct Unsubsidized Loan or a Graduate PLUS Loan and anticipate needing to borrow after this academic year: Borrowing Graduate PLUS Loans during this 2025-26 academic year will preserve your eligibility to continue to borrow up to the full cost of attendance beyond July 1, 2026 under the legacy provision.
3. If you are a Pepperdine GSEP student who has not borrowed a Direct Unsubsidized Loan for your current program: Your annual borrowing cap will be $20,500. This limit will remain in effect for the duration of your program. (Please note that this cap is not new. What is new is that unless you have borrowed Graduate PLUS Loans for this program, the Direct Unsubsidized Loan will be the only federal student loan available to you.
Financial Guidance Resources
If you have any questions please reach out to the Financial Aid Office:
Phone: (310)568-5775
Fax: (310) 568-2399
Email: GSEPfaid@pepperdine.edu
Mailing Address
Pepperdine University Graduate School of Education and Psychology
GSEP Financial Aid Office
6100 Center Drive, 5th floor
Los Angeles, CA 90045
Office Hours
Monday-Friday, 8 AM-5 PM (PST)
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