Important Update for Prospective and Current College Students: Understanding the Proposed OBBB Act
If you’re planning to pursue higher education or are currently enrolled, it’s crucial to stay informed about recent legislative developments that could impact your financial aid options. One such proposal—the Opportunity and Borrower Benefits Act (OBBBB)—is currently under review and may bring significant changes to federal student loan programs and financial assistance.
What You Need to Know About the OBBB Act
Under the proposed legislation, the landscape of federal student aid could see considerable changes:
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Subsidized Loans: Federal subsidized loans, which currently provide important financial relief to undergraduate students, might be phased out. Moving forward, undergrad students would only have access to unsubsidized loans, which accrue interest from the outset.
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Graduate and Professional Students: These students could lose eligibility for Federal Direct Plus Loans, a key source of funding for graduate studies.
Exceptions to the New Rules
Some students may still retain access to existing loan benefits:
- Students already enrolled in college as of June 30, 2026, and
- Those who have previously borrowed federal student loans for their current academic program (or had loans taken out on their behalf).
For these students, the ability to borrow under the current rules would be maintained for either:
- The remaining duration of their program, or
- A maximum of three additional academic years, whichever comes first.
For instance, if a student has completed two years of a four-year degree, they could continue borrowing under the old system for up to two more years to complete their studies.
Additional Impacts on Financial Aid
The proposed legislation also includes measures that could strain students’ ability to finance their education further:
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Pell Grant Adjustments: Eligibility for Pell Grants might become more restrictive, with increased requirements for full-time enrollment (raising the threshold to 15 credits per semester). Grants for students enrolled part-time would be eliminated entirely, and the maximum grant amount may be reduced from $7,395 to $5,710. Considering that approximately 40% of undergraduates receive Pell Grants, these changes could significantly increase reliance on student loans.
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Endowment Tax: The bill proposes raising the tax on college endowments from 1.4% to an unprecedented 21%. Since colleges often use endowment funds to provide scholarships and financial aid, this steep increase could lead to reduced aid availability and higher out-of-pocket costs for students.
Why This Matters
These proposed modifications