Federal Financial Aid Changes

In addition to securing two years of Federal Pell Grant funding, the OBBBA establishes the Workforce Pell program for short-term certificates. While this may expand eligibility for some students once state-level approvals are finalized, LBCC is waiting for official state guidance before implementing these changes.  

Beginning in the 2026-27 academic year, the OBBBA also eliminated Federal Pell Grant eligibility for some students. Students who are receiving enough non-federal grants and scholarships to cover 100% or more of their estimated Cost of Attendance, and students with a Student Aid Index at least twice the value of the maximum Pell award in the given award year, will no longer be eligible for Federal Pell Grants. 

Beginning with the 2026-27 academic year, the OBBBA requires schools to prorate Federal Direct Loans for students enrolled less than full-time. This means your loan amount will be adjusted to match your specific enrollment level when your eligibility is determined. You must still be enrolled at least half-time to qualify for these loans. 

These rules are currently awaiting final federal approval before becoming official.

The OBBBA places annual and lifetime aggregate limits on Parent PLUS Loans effective July 1, 2026. Parents of dependent undergraduate students will be able to borrow up to $20,000 per academic year for their student and up to $65,000 over that student's academic career. These limits apply per student, regardless of how many parents are borrowing. A legacy provision is in place for current parent borrowers to continue to borrow Parent PLUS Loans under the current rules for up to three years, or until their student completes their program, whichever happens first. 

These changes have been agreed upon in Negotiated Rulemaking and we are awaiting formal finalization before they become official regulatory guidance. 

The OBBBA reduces the number of repayment plan options to a single income-based plan, RAP, and an updated Standard Repayment Plan. These new plans will begin July 1, 2026, for any new loans borrowed after that date. Current borrowers can also choose to switch to one of the new plans. If a current borrower does not take out any new loans after July 1, 2026, and is on the current standard, graduated, or extended repayment plan, they may keep that plan until they pay off their loans. Any borrower on a current income-based repayment (IBR) plan can maintain their current plan or switch between other available plans before July 1, 2028. Any outstanding loans utilizing one of the current IBR plans on July 1, 2028, will be converted to the new Repayment Assistant Plan.  

The income-based plan, called the Repayment Assistant Plan or RAP, has varying monthly payments based on the borrower's and their spouse's AGI. The rate will be between 1-10% of AGI, but cannot be reduced lower than $10 per month. RAP is a 30-year repayment period, and payments made under this plan can qualify for Public Service Loan Forgiveness. RAP also eliminates negative amortization so that a borrower's outstanding debt cannot increase even though they make their monthly payments. 

The new Standard Repayment Plan is a fixed repayment plan over 10, 15, 20, or 25 years based on the total amount of borrowed loans or outstanding debt when opting into the Standard Repayment Plan. Any new loans borrowed after July 1, 2026 will automatically be put into the Standard Repayment Plan unless they choose another option when entering repayment.

To ensure program value, the Department of Education now monitors "Gainful Employment for All." This metric compares the earnings of college graduates to those of high school graduates in related careers. Programs where graduates consistently earn less than their peers without a degree may lose access to federal student loans.

LBCC expects all our programs to meet these standards. If a program ever becomes at risk of losing loan eligibility, we will notify impacted students immediately.