FAFSA Just Changed—Here's What You Need to Know

Did You Know? The "One Big Beautiful Bill" Has Already Changed FAFSA and Federal Financial Aid

If you completed the 2026–2027 Free Application for Federal Student Aid (FAFSA®), you did so under a completely new set of federal financial aid rules.

The One Big Beautiful Bill Act (OBBBA), signed into law in July 2025, officially took effect on July 1, 2026, bringing some of the most significant changes to federal student aid in years. These updates affect how Pell Grants are awarded, how much students and parents can borrow, how loans will be repaid, and even how certain family assets are treated on the FAFSA.

For students attending Historically Black Colleges and Universities (HBCUs) and Historically Black Community Colleges (HBCCs)—where many students rely heavily on federal aid—understanding these changes is more important than ever.

If your financial aid package looks different this year, these new rules may be the reason.

Did You Know? Pell Grant Eligibility Is Now More Restrictive

Several new eligibility requirements are now in effect.

Students are no longer eligible for a Pell Grant if non-federal scholarships and grants already cover their full Cost of Attendance—even if they would have otherwise qualified based on financial need.

Additional changes include:

• Students with a Student Aid Index (SAI) at or above twice the maximum Pell Grant award are no longer eligible.

• Foreign earned income exclusions are now added back into the income calculation used to determine Pell eligibility.

• Pell Grants are now prorated based on enrollment intensity, meaning students taking fewer credit hours will generally receive a smaller award.

The Good News

Congress also included significant investments to strengthen the Pell Grant program by:

• Providing $10 billion to help sustain the program over the next two years.

• Expanding Pell Grant eligibility to certain approved short-term workforce training and credential programs, opening new opportunities for students seeking career-focused education.

Did You Know? Federal Student Loan Limits Have Changed

Beginning July 1, 2026, new borrowing limits apply to many federal loans.

Key changes include:

• A $257,500 lifetime borrowing limit for most federal student loans (excluding Parent PLUS Loans).

• Parent PLUS Loans for new borrowers are now limited to:

  • $20,000 per year, and

  • $65,000 total per student.

• Federal loan amounts are now prorated for students enrolled less than full-time.

A Note for Current Borrowers

Families who received Parent PLUS Loans before July 1, 2026, for students already enrolled in an eligible degree program may still qualify under certain legacy provisions.

If this applies to your family, contact your institution's financial aid office to determine which rules apply to your situation.

Did You Know? Federal Student Loan Repayment Is Being Simplified

The federal government is also restructuring repayment options.

For loans first disbursed after July 1, 2026, borrowers generally have two repayment choices:

• Repayment Assistance Plan (RAP) – a new income-based repayment option.

• Standard Repayment Plan – traditional fixed monthly payments.

Existing repayment plans—including SAVE, PAYE, and Income-Based Repayment (IBR)—are being phased out and are expected to end by July 1, 2028.

Borrowers who only have loans issued before July 1, 2026, may remain in their current repayment plan or voluntarily transition to RAP. Those who do not select a repayment option before the transition deadline may be automatically placed into RAP or another qualifying repayment plan, depending on eligibility.

Did You Know? Some FAFSA Asset Rules Now Benefit Families

Not every change reduces aid eligibility.

The updated FAFSA now excludes several assets that previously counted against families.

These include:

• Family-owned businesses with fewer than 100 full-time employees.

• Family farms where the family lives.

• Certain family-owned commercial fishing businesses.

These revisions are intended to provide a more accurate picture of a family's financial resources and may improve aid eligibility for some applicants.

Why This Matters for HBCU Students

HBCUs and HBCCs educate a significant share of the nation's Pell Grant recipients. Many students also depend on Parent PLUS Loans and other federal aid to bridge the gap between financial aid and the actual cost of attending college.

That means these policy changes are more than administrative updates—they have real consequences for college affordability, enrollment decisions, student persistence, and degree completion.

Understanding these changes empowers students and families to make informed financial decisions before small surprises become major barriers.

How HBCU C.A.R.E.S. Is Responding

At HBCU C.A.R.E.S., we believe information is one of the most powerful tools for student success.

Through our Advocacy & Policy Influence and Workforce Development & Education pillars, we are committed to helping HBCUs, HBCCs, students, families, and institutional leaders understand evolving federal policies and respond strategically.

Whether through educational resources, policy updates, campus partnerships, or workforce initiatives, our goal is simple:

Ensure that every HBCU student has access to the knowledge and resources needed to successfully navigate higher education and the changing financial aid landscape.

What Students and Families Should Do Next

✔ Review your 2026–2027 financial aid award carefully. Compare it with last year's package and ask questions if your aid has changed.

✔ Speak with your financial aid office. They can explain how the new federal rules apply to your specific circumstances.

✔ Review Parent PLUS borrowing plans. Make sure your family's financing strategy aligns with the new annual and lifetime limits.

✔ Prepare for repayment changes. Current borrowers should begin learning about the transition away from SAVE, PAYE, and other existing repayment plans before the 2028 deadline.

Staying Informed Matters

Federal financial aid policy continues to evolve, and these changes represent one of the largest overhauls in recent years.

For HBCU students and families, staying informed can make the difference between maximizing available aid and missing important opportunities.

HBCU C.A.R.E.S. will continue to monitor these developments and provide timely, reliable information to help our institutions, students, and communities navigate the future of higher education with confidence.