Federal Changes Impacting Financial Aid
Federal legislation passed on July 4, 2025, will change how financial aid is awarded starting July 1, 2026. These updates may impact your eligibility for grants, loans, and repayment options.
Please note that final rules associated with the regulatory interpretation for the reconciliation bill have not yet been published. The information provided is based on the current interpretation of the law and may be subject to changes. As more information becomes available from the U.S. Department of Education, Southeast Missouri State University will continue to monitor the development of the federal regulations associated with the bill and provide updates accordingly.
*Unless otherwise stated, the effective date for changes below is July 1, 2026.
Free Application for Federal Student Aid (FAFSA) Changes
Exemptions of family farm and family-owned small business assets from the Student Aid Index (SAI) calculation were reinstated, and expansion of asset exemptions to family-owned commercial fisheries were also made.
Pell Grant Changes
Foreign income must be included in the Adjusted Gross Income used to calculate Pell Grant eligibility.
Students who receive grants or scholarships from non-federal sources fully covering their Cost of Attendance (COA) are ineligible to receive a Pell Grant, even if otherwise eligible for the program.
Prevents students from receiving Pell Grants if their SAI exceeds twice the maximum Pell Grant award.
Federal Loan Changes
Graduate PLUS Loan Program
The Graduate PLUS Loan Program will be eliminated for new borrowers beginning July 1, 2026. However, there is a legacy provision in place for past federal student borrowers.
Legacy Provision: If a student-borrower had a Federal Direct Loan disburse before July 1, 2026, and remains enrolled in the same program of study that they were enrolled in as of July 1, 2026, the student-borrower can continue to borrow Graduate PLUS Loans from the program for 3 academic years or the remainder of their expected time to complete their program (based on full-time enrollment), whichever is less.
A borrower under the legacy provision will lose eligibility to continue to borrow Graduate PLUS loans if:
- The student changes their program of study
- Please note: Changing a concentration within the program may not impact Graduate PLUS Loan legacy eligibility. Students should contact Student Financial Services to determine whether their concentration change will impact their legacy status
- The student ceases enrollment
- The student completes a total withdrawal
- The student exceeds the allotted legacy timeframe
Parent PLUS Loan Program
Parent PLUS Loan Annual and Aggregate Loan Limit Changes:
- New parent borrowers may borrow up to $20,000 per academic year per dependent student
- New parent borrowers will have an aggregate Parent PLUS Loan limit of no more than $65,000 per dependent student.
Legacy Provision: If a dependent student has a Federal Direct Loan (subsidized, unsubsidized, or PLUS) made before July 1, 2026, while enrolled in a program of study, or the parent borrower had a Parent PLUS Loan disburse before July 1, 2026, while their dependent student is enrolled in a program of student, the parent borrower can continue to borrow from the program under current loan limits for 3 academic years or the remainder of their expected time to complete their program (based on full-time enrollment), whichever is less.
A parent borrower under the legacy provision will lose eligibility to continue to borrow outside of the new annual and aggregate limits if:
- Their student changes their program type
- Changing the type of degree program will result in losing their legacy provision (for example, changing from an associate's to a bachelor's)
- Changing majors within the same program will not impact the Parent PLUS Loan legacy provision (for example, changing from Bachelor of Arts in Communication to Bachelor of Science in Psychology)
- The student ceases enrollment
- The student completes a total withdrawal
- The student exceeds the allotted legacy timeframe
Schedule of Reductions (Loan Proration)
Effective for the 2026-2027 aid year, the loan amounts for students who are enrolled less than full-time in any given semester are subject to a reduction of the loan amount for that term. Changes in enrollment during a term may result in an adjustment to loan amounts for the current or subsequent term.
Annual, Aggregate, and Lifetime Loan Limits
Graduate-level students remain at an annual limit of $20,500 in unsubsidized loans, and professional students have a new annual limit of $50,000. The aggregate limit is capped at $100,000 for graduate students and $200,000 for professional students, and excludes amounts borrowed as an undergraduate. There are no professional programs offered at Southeast, based on the U.S. Department of Education definition.
A lifetime borrowing limit of $257,500 applies to all federal student loans (undergraduate and graduate), excluding Parent PLUS and Graduate PLUS Loans.
Legacy Provision: If a borrower has a Federal Direct Loan made before July 1, 2026, while enrolled continuously in current graduate program of study, the student is not subject to the new loan limits for 3 academic years or the remainder of their expected time to complete their program (based on full-time enrollment), whichever is less.
A borrower under the legacy provision will lose eligibility to continue to borrow outside of the new annual, aggregate, and lifetime limits if:
- The student changes their program of study
- The student ceases enrollment
- The student completes a total withdrawal
- The student exceeds the allotted legacy timeframe
New Annual Loan Limits
| Grade Level | Dependent | Independent |
|---|---|---|
| Freshman (0-29 hours) | $5,500 (no more than $3,500 subsidized) |
$9,500 (no more than $3,500 subsidized) |
| Sophomore (30-59 hours) | $6,500 (no more than $4,500 subsidized) |
$10,500 (no more than $4,500 subsidized) |
| Junior/Senior (60+ hours) | $7,500 (no more than $5,500 subsidized) |
$12,500 (no more than $5,500 subsidized) |
| Parent PLUS | $20,000 | N/A |
| Graduate | N/A | $20,500 |
| Professional | N/A | $50,000 |
Legacy Annual Loan Limits
| Grade | Dependent | Independent |
|---|---|---|
| Freshman (0-29 hours) | $5,500 (no more than $3,500 subsidized) |
$9,500 (no more than $3,500 subsidized) |
| Sophomore (30-59 hours) | $6,500 (no more than $4,500 subsidized) |
$10,500 (no more than $4,500 subsidized) |
| Junior/Senior (60+ hours) | $7,500 (no more than $5,500 subsidized) |
$12,500 (no more than $5,500 subsidized) |
| Parent PLUS | N/A | N/A |
| Graduate | N/A | $20,500 |
| Professional | N/A | $20,500 |
New Aggregate Loan Limits
| Student Type | Aggregate |
|---|---|
| Undergraduate dependent students | $31,000 (no more than $23,000 subsidized) |
| Undergraduate independent students | $57,500 (no more than $23,000 subsidized) |
| Parent PLUS per dependent | $65,000 |
| Graduate/Doctoral students (Non-Professional) | $100,000 |
| Professional Students * | $200,000 |
| Lifetime Limit (Undergraduate and Graduate combined, excluding PLUS) | $257,500 |
Legacy Aggregate Loan Limits
| Student Type | Aggregate |
|---|---|
| Undergraduate dependent students | $31,000 (no more than $23,000 subsidized) |
| Undergraduate independent students | $57,500 (no more than $23,000 subsidized) |
| Parent PLUS per dependent | N/A |
| Graduate/Doctoral students (Non-Professional) | N/A |
| Professional Students* | N/A |
| Lifetime Limit (Undergraduate and Graduate combined excluding PLUS) | N/A |
| Graduate/Professional/Undergraduate (not lifetime) | $138,500 |
Loan Repayment Changes
Loan repayment options will vary for current borrowers, who have no new loans after July 1, 2026, and new borrowers who have one or more loans made after July 1, 2026. For any questions regarding repayment options or changes, please contact your loan servicer or visit the Federal Student Aid.
Effective July 1, 2027
Economic Hardship and Unemployment Student Loan Payment Deferments will not be available for new borrowers.
- Borrowers with loans made on or before July 1, 2027, are still able to use these deferment options under the current rules. Once all a borrower’s loans made prior to that date are paid in full, these options will cease to exist.
Loans made on or after July 1, 2027, will be eligible for forbearance for up to nine months in any two-year period.
All information herein is tentative, pending final regulatory guidance from the US Department of Education. For further information or updates, please refer to the Federal Student Aid website: One Big Beautiful Bill Act.
Federal Student Loan Eligibility and Schedule of Reductions (SOR) – FAQ
The Schedule of Reductions (SOR) is a federal requirement that adjusts your Federal Direct Student Loan eligibility based on your enrollment level. If you are enrolled less than full-time, your annual loan eligibility may be reduced.
SOR applies only to Federal Direct Student Loans and does not apply to Parent PLUS Loans.
Your annual loan eligibility is based on your enrollment compared to full-time status:
Credit hours enrolled ÷ Credit hours considered full-time × 100 = percentage of annual loan eligibility
This percentage is applied to your annual Federal Direct Student Loan limit.
- Undergraduate students: 12 credit hours per semester (24 credit hours per academic year)
- Graduate students: 9 credit hours per semester (18 credit hours per academic year)
Yes.
A dependent junior has an annual Federal Direct Student Loan limit of $7,500.
- Full-time enrollment: 24 credit hours
- Student enrolls in: 21 credit hours total
- This equals 87.5% of full-time enrollment
Revised annual eligibility:
$7,500 × 88% = $6,600
Loan funds are divided between semesters based on enrollment.
Example using $6,600 annual eligibility:
- Fall: 9 credit hours
- Spring: 12 credit hours
- Total: 21 credit hours
Fall disbursement:
9 ÷ 21 × $6,600 = $2,829
Spring disbursement:
12 ÷ 21 × $6,600 = $3,771
- If you drop courses before your loan is disbursed, your annual eligibility may be reduced.
- If you reduce enrollment after your loan is disbursed, your remaining eligibility for future terms in the same academic year may be reduced.
No. SOR applies only to Federal Direct Student Loans. It does not affect Parent PLUS Loans.
No. Actual loan eligibility depends on grade level, dependency status, loan type, enrollment, and other federal financial aid requirements.
If you have questions about how SOR affects your financial aid, please contact Student Financial Services.
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