On July 4, 2025, what’s often referred to as the One Big Beautiful Bill Act (OBBB, or OB3), officially titled the Working Families Tax Cut Act (WFTC), was signed into law.
We recognize that the changes associated with this legislation may have significant and, in some cases, challenging impacts for certain students and specific degree programs. And, we understand that periods of transition like this can create uncertainty, and we want to support you as more details become clear.
Though passed, it took time for the final regulations to be released, and some guidance is still pending. Because of this, pieces of information shared here may continue to evolve. We encourage you to check back in the coming months for updates as we receive additional clarity.
The most notable change in this law is the elimination of the Graduate PLUS (Grad PLUS) loan for new and/or first-time Direct Loan borrowers after July 1, 2026.
Legacy students, those who have borrowed Direct Loans before July 1, 2026 and remain in the same academic program, will continue to have access to the Grad PLUS loan for up to 3 years or until they complete their current program, whichever comes first. Be aware: changing programs may affect your eligibility.
There were also significant changes to how graduate and professional programs are classified as well as their annual and aggregate unsubsidized loan limits.
Incoming graduate students will continue to be eligible for up to $20,500 Unsubsidized Federal Direct Loan annually.
Programs designated as Professional will be eligible for up to $50,000 annually. There are currently 5 programs at UW – Madison that are classified as Professional for these purposes: Law (JD), Medicine (MD), Pharmacy (DPH), Veterinary Medicine (DVM), School Psychology (PhD), and Counseling Psychology. All others are considered graduate programs for borrowing purposes.
Grad/Prof Federal Student Loan Borrowing: Before and After OB3
| Before July 1, 2026 | After July 1, 2026 | |
| Graduate Students | Borrow up to $138,500 Federal Direct Loans (including undergraduate loans).
Grad PLUS can cover the remaining cost of attendance, after all other financial aid. |
Borrow up to $100,000 Federal Direct Unsubsidized Loans (excluding undergraduate loans, including Grad PLUS).
New/first time borrowers no longer eligible for Grad PLUS |
| Professional Students | Borrow up to $224,000 Federal Direct Loan (including undergraduate loans).
Grad PLUS can cover the remaining cost of attendance, after all other financial aid. |
Borrow up to $200,000 Federal Direct Unsubsidized Loan (excluding undergraduate loans, including Grad PLUS).
New/first time borrowers no longer eligible for Grad PLUS |
| If a student’s costs exceed their annual or lifetime max | The student could borrow Grad PLUS to cover any remaining amounts. | There’s no federal option beyond the maximum. Students must seek private funding. |
Parents borrowing with the Parent Loan for Undergraduate Students (PLUS) for their undergraduate students will also see a change in the amount they are able to borrow each year and over the course of their student’s degree.
Previously, parents could borrow up to the student’s full cost of attendance minus any other financial aid received. Under the new limits, parents may now borrow a maximum of $20,000 per student each year. In addition, while PLUS Loans previously had no aggregate (lifetime) borrowing limit, parents are now capped at $65,000 per student over the course of that student’s degree.
Legacy parents, those who borrowed Direct Loans before July 1, 2026 and whose student remains consecutively enrolled, will continue to have access to the PLUS loan for up to 3 years or until their student graduates, whichever comes first.
PLUS Loan Borrowing: Before and After OB3
| Before July 1, 2026 | After July 1, 2026 | |
| Annual PLUS Limit | Cost of attendance minus other financial aid. | $20,000 per student |
| Aggregate Lifetime PLUS Limit | None | $65,000 per student |
Reduction for Less than Full-Time
Federal Direct Student Loan borrowers who enroll less than full-time but at least half-time (the minimum enrollment to be eligible) will have their loan amounts reduced in proportion to their enrolled credits. Our team will confirm enrollment at the time the loan is disbursed.
If a student drops a class or withdraws after the term begins, it may affect loan amounts for future terms within the same academic year. For example, if you begin the fall term enrolled full-time but later drop a course or withdraw, your spring loan amount will be reduced, even if you return to full-time enrollment in the spring.
Repayment Options
Borrowers with new loans made on or after July 1, 2026 will only have two repayment options: the new tiered standard repayment plan and the new income-based repayment plan, Repayment Assistance Plan (RAP).
Current borrowers with no new loans made on or after July 1, 2026, are eligible to enroll in the current Standard, Graduated, Extended, or Income-Based Repayment (IBR) plan, and may also opt in to the new RAP. But they must do so before July 1, 2028 or they will be automatically placed into RAP.
You can learn more about repayment on our website and with Federal Student Aid.
Alternative or Additional Support
Though not available to everyone and often more difficult to qualify for without credit and/or a cosigner, there are a variety of private loan options to choose from.
Refer to our website for information about receiving Private Loans. And use our trusted tool FastChoice to compare private loan options from lenders we’ve vetted and are generally popular with other UW–Madison students.
Current students can schedule an appointment to meet with a financial aid advisor by using Starfish in their MyUW portal. All others can call our office, 608.262.3060, to schedule.