OBBBA is in effect, but a federal judge paused the definition of a professional degree just days before implementation. Here’s what your financial aid team needs to know.
Published by Global Financial Aid Services | July 2026 | 5-minute read
The One Big Beautiful Bill Act (OBBBA) was signed on July 4, 2025. Twelve months later, the most significant overhaul to federal student aid in years is already in effect. July 1, 2026, has passed, and the changes did not slow down. If anything, they got more complicated because a federal court just intervened on one piece of the rollout.
This post breaks down what took effect as planned, what a judge paused days before the deadline and what your office needs to prioritize right now.
What Took Effect on July 1, as Planned
- Grad PLUS Loans Are Gone for New Borrowers
As of July 1, 2026, new borrowers can no longer access Federal Grad PLUS Loans. This is confirmed and in effect, not delayed. Students who were already enrolled and had a Direct Loan disbursed for their current program before July 1 keep legacy access to Grad PLUS for up to three additional years or until their program ends, whichever comes first.
For financial aid offices, this means packaging policies, counseling scripts and award letters for graduate students who assumed Grad PLUS would be part of their financial plan need to be updated now, not planned for later.
- New Annual and Aggregate Loan Limits
The new caps also took effect on schedule. For graduate students, the limit is $20,500 per year with a $100,000 aggregate. For professional degree students, it is $50,000 per year with a $200,000 aggregate. Parent PLUS is capped at $20,000 per year per dependent student, with an aggregate lifetime limit of $65,000. The overall lifetime aggregate across all federal borrowing is $257,500.
- Loan Proration for Less-Than-Full-Time Students
Borrowers enrolled less than full time now borrow in direct proportion to their enrollment level. This is live, and proration errors for part-time students, a growing population across career, trade and degree granting programs alike, are now a real compliance exposure point.
- Pell Grant Eligibility: Expanded and Restricted
Pell eligibility expanded to students in eligible workforce programs, even those who already hold a bachelor’s degree. It also restricted eligibility for students whose cost of attendance is fully covered by scholarships or waivers, and for students with a Student Aid Index exceeding twice the maximum Pell award. Both changes are in effect and require updated eligibility logic.
- Repayment Plans Narrowed
ICR, PAYE and SAVE are sunset for new activity after July 1, 2026. Borrowers are limited to IBR and the new Repayment Assistance Plan (RAP).
What a Federal Court Paused, and Why It Matters
Since our original post was published, a federal court decision has added a new layer of uncertainty to the implementation of these changes. On June 25, 2026, U.S. District Judge Beryl Howell in Washington, D.C. blocked one specific piece of the rollout: the Department of Education’s regulatory definition of “professional degree.”
The Department’s final rule had narrowed “professional degree” status, and the higher $50,000 per year and $200,000 aggregate borrowing limit that comes with it, to just 11 programs: pharmacy, dentistry, veterinary medicine, chiropractic, law, medicine, optometry, osteopathic medicine, podiatry, theology and clinical psychology. Everything else, including nursing, physician assistant programs, physical therapy and speech language pathology, was classified as ordinary “graduate,” subject to the lower cap.
Judge Howell found that plaintiffs, including nursing and healthcare program groups, were likely to succeed in showing that this narrow list contradicts the broader three-part test Congress actually wrote into the statute: a degree qualifies as professional if it prepares a student for professional practice, requires an advanced skill level and generally requires licensure. She stayed the Department’s narrow definition while the case proceeds.
That ruling required the Department to revisit how it was applying the professional degree classification while the stay remains in effect. On June 29, 2026, the Department published an interim list of classifications that applies the broader statutory test for the duration of the court’s stay. Practically, this means some programs that would have been capped at $20,500 per year are, for now, eligible for the higher $50,000 per year limit instead. If the Department ultimately prevails on appeal or the litigation otherwise resolves in its favor, the narrower definition could be reinstated, potentially shifting some programs back to the lower borrowing tier.
A separate case, filed by 25 states and Washington, D.C. in the District of Maryland, challenges the same professional degree rule on similar grounds and is still pending.
Importantly, the court did not touch Grad PLUS elimination or the underlying loan limit structure. Those are confirmed and in effect. What is unsettled is only which degree programs get sorted into which limit tier and that classification could shift again depending on how the litigation resolves.
The Compliance Risk Nobody Was Talking About in June, and Still Isn’t
Our original read was that the biggest risk for many of the institutions we serve was in the intersections: a part-time professional student on a scholarship hitting three rule changes at once. That risk is still real. But now there is a second layer on top of it. The professional degree classification your office uses today may not be the classification that holds up in six months.
Packaging a nursing student under the interim broader definition, then having that classification reversed on appeal, creates a retroactive compliance question that most offices have never had to handle: What happens to aid already packaged and disbursed under a classification that later changes. Manual review of these overlapping edge cases, now with an active litigation variable added in, is exactly where program review findings get born.
This is exactly the kind of moving target that stretches internal aid office capacity, whether your institution runs a lean two-person office or a mid-sized team juggling packaging, verification, Return to Title IV and reconciliation at the same time.
For 30 years, Global Financial Aid Services has supported career and trade schools, private institutions, community colleges and universities, across programs from clock hour to Ph.D., as a Title IV Third-Party Servicer. Since 1996, Global has processed more than 5 million student files while maintaining full compliance with federal regulations through every major regulatory shift, including this one.
GLOBAL Consulting can review your current packaging policies and procedure manual against the interim professional degree classification list, so you know exactly which tier applies to which program before your next disbursement cycle. For offices that need ongoing capacity rather than a one-time review, Full-Scope Financial Aid Processing and GLOBAL Remote Processing extend your team with staff who track regulatory and litigation updates as part of the job, integrated directly with your Student Information System. Learn more here → globalfas.com
Three Things to Do Right Now
- Audit your packaging against the interim classification list. If you have graduate or professional students in fields like nursing or physician assistant programs, confirm which limit tier you are currently applying and whether it matches the Department’s June 29 interim guidance.
- Build a litigation watch into your compliance process. This is no longer a one-time rule change to absorb. The professional degree definition is actively being litigated in two federal courts, and your packaging logic needs to be able to move when the courts do.3
- Document your classification decisions now. If a classification is reversed later, you want a clear record of what rule was in effect and what guidance you were following at the time you packaged aid.
Global’s leadership team comes from a higher education background and has built its model around one idea: financial aid processing should protect compliance without slowing down student service, no matter how fast the regulatory landscape shifts.
Questions about bill implementation or the professional degree litigation? Contact our team at → globalfas.com, cdonovan@globalfas.com or 228.523.2797.
Sources
July 30, 2026