Federal Updates - One Big Beautiful Bill Act (OB3)
*Please note - while the law has passed and the regulations are effective July 1, 2026, final regulatory guidance has not yet been published by the Dept. of Education. All information below is subject to change as regulatory guidance is released.
The One Big Beautiful Bill Act, sometimes called OB3, is a law signed during 2025 that enacts sweeping changes across many areas, with notable impacts to Federal Student Aid. Not all changes will be addressed below, but the full text of the OB3 can be accessed here. All changes to federal aid provisions can be found in Subtitle B, Sec. 81001 of the OB3. We encourage you to email us at finaid@uiwtx.edu with specific questions, if they are not addressed below.
Last updated: 2/13/2026
Which changes apply to all students?
Loan proration
- All institutions will be required to prorate annual loan amounts in direct proportion to the percent of full-time status for which the student is enrolled.
- This is one of the areas of the new law that requires additional clarification from the Dept. of Education before we attempt to interpret how it affects our students and our aid offers.
FAFSA Asset Exemptions
- Reinstates the exemptions of family farm and family-owned small business assets from the Student Aid Index (SAI) calculation and expands asset exemptions to family-owned commercial fisheries.
Foreign Income and Pell Eligibility
- Requires that foreign income be included in the AGI used to calculate Pell grant eligibility.
Full Cost of Attendance Scholarships/Grants
- Students who receive grants or scholarships from non-federal sources covering their entire cost of attendance (COA) are ineligible to receive a Pell grant, even if otherwise eligible for the program. UIW may be required to reduce a student's non-federal aid in order to maintain the student's eligibility for the Pell grant.
Students with High Student Aid Index (SAI)
- Students may no longer receive Pell grants if their SAI exceeds twice the maximum Pell grant award.
The changes below apply to all new students after June 30, 2026 (including transfer students) and students who do not otherwise meet the legacy provisions.
What are the legacy provisions?
The legacy provisions refer to the circumstances in which a student's loan eligibility will be allowed to continue at the current annual and/or aggregate limits, rather than the new limits. In order to qualify for legacy provisions, our understanding is that the following requirements must all be met:
- The student must have borrowed a direct federal loan (subsidized, unsubsidized, PLUS, etc.) that has been disbursed before July 1, 2026; and
- The student must be enrolled in the same program in which they were enrolled as of June 30, 2026. Students on a leave of absence or who withdrew from the previous term will not be considered "enrolled" unless they have begun a new course on/before June 30, 2026. Summer enrollment is not expected to be required, as long as the student remained enrolled for the preceding Spring semester; and
- The student will qualify for the legacy provisions for a maximum of three years, or to the published end of their program, whichever is less; and
- Students who qualify for the legacy provisions may not elect to forgo the legacy provisions to take advantage of the new annual and lifetime loan limits.
How is undergraduate aid changing?
Parent PLUS Loan Annual/Lifetime Limits
- The Parent PLUS Loan now has an annual limit of $20,000 per year, with a lifetime limit per dependent student of $65,000.00, unless the student meets legacy provisions, without regard to any amounts repaid, forgiven, canceled, or otherwise discharged on any such loan. Parents who expect to need assistance for four full years should consider borrowing $16,250 or less per year from the Parent PLUS Loan to avoid hitting the lifetime limit before their student graduates. Parents whose students meet legacy provisions will continue to be able to borrow loans (if credit-approved) up to the maximum cost of attendance established by the UIW Office of Financial Assistance.
How is graduate/professional aid changing?
Elimination of the Graduate PLUS Loan
- The Graduate PLUS Loan is no longer available for new graduate/professional students, unless they meet the legacy provisions.
Changes to graduate annual and aggregate (lifetime) limits
- The annual limit for graduate students will remain $20,500 per year
- The aggregate limit is now capped at $100,000 for new graduate students (non-legacy) and does not include amounts borrowed as an undergraduate student.
- The lifetime borrowing limit across all federal student loans (excluding Parent PLUS and Graduate PLUS Loans) is now $257,500 for non-legacy students.
Changes to professional annual and aggregate (lifetime) limits
*The Dept. of Education has not changed the definition of the programs it defines as “professional.” The programs that fall under this definition at UIW are Pharmacy (Pharm.D.), Optometry (O.D.), and Osteopathic Medicine (D. O.).
- The annual unsubsidized loan limit for new professional program students is now $50,000 per year for non-legacy students.
- The aggregate professional loan limit is capped at $200,000, including any amounts borrowed at the graduate level, NOT including any amounts borrowed at the undergraduate level.
- The lifetime limit across all graduate, professional, and undergraduate borrowing is now $257,500, excluding Parent PLUS and Graduate PLUS loans.
What other options will graduate/professional students have?
Assistantships
Work-study
Private Loans
- UIW offers a comparison list of private lenders to give students a starting point. However, students are in no way restricted to the list, and the list does not represent endorsement or recommendation by UIW. UIW will work with any private lender a student has chosen to utilize.
- View UIW's comparison list.
- Health Professions Scholarship Programs
- Many UIW students have chosen to utilize Health Professions Scholarship Programs (HPSP) through the armed forces or the National Health Service Corps. These programs typically pay full tuition and fees, along with a monthly stipend.
- Veterans benefits
- Contact the UIW Military & Veterans Center to set up any applicable veterans benefits. Unfortunately, UIW is unable to accept the Hazelwood program, as we are not a state school.
Payment Plans
- The UIW Business Office offers various payment plans through CashNet. No interest is charged, and the plans are not credit-based. There may be a small setup fee on some plans.
Loan Repayment Options
These changes apply to all borrowers, depending upon whether new loans were borrowed on/after July 1, 2026. The studentaid.gov account and the student's loan servicer will be the best source of accurate information on a student's specific loan repayment options.
Changes to Loan Repayment Options
- Creation of a new income-based plan called the Repayment Assistance Plan (RAP).
- If married filing separately, spouse’s AGI and number of dependents are not included in the payment calculation
- Monthly payment is 1-10% of income based on AGI
- $50 off monthly payment (base payment) per dependent
- 30-year repayment period
- Eliminates negative amortization (where unpaid interest each month is added to the principal)
- No cap on monthly payment, even if it’s higher than what the Standard repayment amount would be
- If a borrower makes an on-time payment that reduces their principal by less than $50, the Dept. of Education will make a payment to the principal, up to the amount paid, minus what was applied to the principal, or $50, whichever is less.
- Creation of a new standard plan with 4 fixed terms of 10, 15, 20, or 25 years based on the amount borrowed (or outstanding balance if in repayment).
- Students who borrow any new loans on/after July 1, 2026, will only have two repayment options: a new standard repayment plan, and the new income-based repayment plan, RAP.
- Students with no new loans on/after July 1, 2026, may continue to use the existing Standard, Graduated, Extended, or current Income Based (IBR) repayment plans, or may opt into the new Repayment Assistance Plan (RAP). Current borrowers may also switch between, enter or remain on existing IDR plans until July 1, 2028.
- Borrowers can rehabilitate a defaulted loan twice, instead of once as currently allowed.
- Sunsets the economic hardship and unemployment deferments.
- Reduces the months allowed on forbearance to a maximum of nine months in any two-year period.
