OB3 Financial Aid Guidance

Graduate PLUS loans will be eliminated for enrollment periods that begin on or after July 1, 2026. This means:

• Graduate students will no longer be able to borrow Graduate PLUS loans for any new academic term that starts on or after July 1, 2026.
• Graduate students will instead need to rely on Federal Direct Unsubsidized Loans and any other available funding options, such as private loans.
• Some graduate students may qualify for legacy protection. See legacy section of this page for more details. 

Parent PLUS loans will continue to be available, but new borrowing limits will apply. Some students will be able to qualify for legacy protections. See the legacy section below for more details. 

New Annual Limit

• Parents may borrow up to $20,000 per student, per year.
• If additional loans are needed, we encourage families to look into private loan options. We have a private loan tool, ELM Select, that allows you to explore and compare loan options to find one that works for you. 

New Lifetime Limit

• Parents may borrow up to a total of $65,000 per student in total.

Previously, Parent PLUS loans were limited only by the school’s cost of attendance minus other financial aid received, and there was no lifetime borrowing cap.

For students enrolled in graduate degree programs (such as a master’s or doctoral program that is not classified as a professional program):

• The annual Federal Direct Unsubsidized Loan limit will remain $20,500 per year, which is the same as the current annual limit.

• A new lifetime loan limit of $100,000 will apply.

The lifetime limit means the maximum total amount you can borrow for graduate study over time.

Important:

• This $100,000 limit applies only to graduate-level borrowing.

• This new limit does not include any loans you borrowed as an undergraduate student.

Examples include law, medicine, dentistry, pharmacy, and similar professional degree programs. These programs are defined by U.S. Department of Education, not Virginia Tech. 

For students enrolled in professional degree programs:

• The annual Federal Direct Unsubsidized Loan limit will be $50,000 per year.

• The lifetime loan limit will be $200,000.

This $200,000 limit includes all graduate and professional borrowing combined, but:

• This new lifetime limit does not include loans borrowed during undergraduate study.

In addition to the limits listed above, there will be a new lifetime borrowing cap of $257,500. 

This lifetime cap:

• Includes all federal student loans borrowed for undergraduate, graduate, and professional study combined.

• Does not include PLUS loans.

• Includes loan amounts even if they have already been repaid, forgiven, or discharged.

This means the total amount you borrow over your lifetime will count toward this cap, even if you no longer owe the full amount.

If you were already enrolled in your academic program and have a disbursed federal loan before July 1, 2026, you may be able to continue borrowing under the current federal loan rules. This is known as legacy protection.

To continue borrowing under the current rules, you must:

• Be enrolled in your academic program as of June 30, 2026

• Have received at least one Federal Direct Loan disbursement for that same program before July 1, 2026

• Remain continuously enrolled in that same academic program

If you meet all of these requirements, you may continue using the current borrowing rules.

Note: Legacy eligibility for the Federal Parent PLUS loan is not based on the parent borrower. It is determined by the student meeting the above criteria.  

You will lose eligibility for legacy protection if you:

• Withdraw from your program or stop attending for any reason (Example: medical resignation)

• Transfer to a different institution (transfer students do not qualify)

• Take longer than the expected time to complete your program

The Legacy Protection time limit is whichever is shorter: three years or the remaining time left in the student’s program based on how much they have already completed.

If you take an approved leave of absence that meets federal requirements, it does not count as withdrawing or stopping enrollment. In that case, you may still maintain your legacy eligibility.

Beginning with the 2026–2027 award year, if a student is enrolled less than full-time in an eligible program, their annual Federal Direct Loan limit will be reduced based on the number of credits they are taking compared to full-time enrollment.

The reduction:

• Is proportional to the student’s enrollment level
• Is based on the student’s enrollment status when the school determines loan eligibility at disbursement
• Is rounded to the nearest whole percent

In short:
If you are not enrolled full-time, you cannot borrow the full loan amount. Your annual loan amount is reduced based on how close you are to full-time enrollment.

These proportional loan adjustments apply to:

• All undergraduate, graduate, and professional student Direct Loan borrowers—Direct Subsidized Loans , Direct Unsubsidized Loans, and graduate PLUS Loans (for legacy borrowers).

• Parent PLUS Loans are not subject to these adjustments.

Full-time enrollment for undergraduates at Virginia Tech is 24 credits per academic year (typically 12 credits in fall and 12 credits in spring)

If you enroll in:

• 9 credits in fall
• 12 credits in spring
• That equals 21 total credits for the academic year

Calculate Your Schedule of Reduction 

• 21 ÷ 24 = 87.5%- We will round to the nearest full percent, which is 88%. 
• This means you are enrolled at 88% of full-time status for the academic year.

Apply That Percentage to Your Annual Loan Limit

• If your annual federal subsidized loan limit is $5,500, you would be eligible for:
• $5,500 × 88% = $4,840 for the academic year
• Your annual loan eligibility is reduced proportionally based on your enrollment at disbursement.

Determine Semester Loan Amounts

• Next, we determine how much of your annual loan is available each semester.
  • For a standard two-semester academic year: Each semester represents 50% of the annual loan limit
• Then we look at your enrollment for each individual semester:
  • Fall: 9 credits (75% of full-time for that term)
  • Spring: 12 credits (100% of full-time for that term)
• Each semester’s loan amount is calculated based on that term’s enrollment level.

This plan offers fixed monthly payments, meaning your payment amount will stay the same each month.

Your repayment term (the amount of time you have to repay your loan) will depend on your total loan balance:

• If you borrow less than $25,000, you will repay your loan over 10 years.

• If you borrow more than $100,000, you may have up to 25 years to repay your loan.

• Borrowers with balances between these amounts will have repayment terms that fall within that range.

This is an income-based repayment plan that calculates your monthly payment using your Adjusted Gross Income, which is your total income after certain tax adjustments.

Under this plan:

• Your payment will range from 1 percent to 10 percent of your Adjusted Gross Income, depending on how much you earn. The minimum monthly payment will be $10.

• Your monthly payment will be reduced by $50 for each dependent you claim.

• There is no zero-dollar payment option under this plan.

• Any remaining loan balance will be forgiven after 30 years (after making 360 qualifying monthly payments).

• If your calculated payment does not cover all of the interest that accrues, the unpaid interest will be waived, meaning it will not be added to your loan balance.

• The federal government will ensure that at least $50 of your monthly payment goes toward reducing your principal balance, even if your calculated payment would otherwise go mostly toward interest.

If you do not take out any new loans on or after July 1, 2026, you may continue using the following repayment plans:

• Standard Repayment Plan

• Graduated Repayment Plan

• Extended Repayment Plan

• Income-Based Repayment

However, the following repayment plans will be eliminated on July 1, 2028:

• Income-Contingent Repayment

• Pay As You Earn

• Saving on a Valuable Education

Borrowers enrolled in one of the plans being eliminated must switch to a different eligible repayment plan before July 1, 2028.

If you do not choose a new repayment plan before that date, you will automatically be placed into the Repayment Assistance Plan, if you are eligible.

For Parent PLUS loans made on or after July 1, 2026:

• Borrowers will be eligible only for the new Standard Repayment Plan.

• Parent PLUS loans will not be eligible for the Repayment Assistance Plan.

• Economic hardship deferment will no longer be available.
  Borrowers with loans made on or after July 1, 2027, will not be able to pause their payments due to financial hardship under the economic hardship deferment option.

• Unemployment deferment will no longer be available.
  Borrowers with loans made on or after July 1, 2027, will not be able to pause their payments due to unemployment under the unemployment deferment option.

• Forbearance will be limited.
  For loans made on or after July 1, 2027, you may only receive forbearance for a maximum of nine months within any two-year period.
  Forbearance allows you to temporarily pause or reduce your payments, but interest may continue to accrue during this time.

These changes apply only to federal student loans made on or after July 1, 2027.

If your loan was made before July 1, 2027, you will still have access to the current deferment options available under existing regulations.

• You can rehabilitate a defaulted federal student loan two times instead of just once
• Currently, borrowers are only allowed to rehabilitate a loan one time. Starting July 1, 2027, you will be allowed to complete the rehabilitation process twice if your loan goes into default more than once.
• The minimum monthly payment required during rehabilitation will increase from $5 to $10 dollars.
• If your calculated rehabilitation payment amount is very low, the minimum you will be required to pay each month will increase to $10.
• You must make nine on-time monthly payments within ten consecutive months. Missing a payment or paying late could restart the process.
• If you previously returned your loan to good standing through the Fresh Start initiative, that action does not count as using one of your rehabilitation opportunities.

• Vist the Federal Student Aid webpage for updates regarding OB3. 

• Vist the U.S. Congress webpage to read the full legislation. 

• Vist the U.S. Department of Education website for most recent press releases regarding OB3.