What you should know about the One Big Beautiful Bill Act

The One Big Beautiful Bill Act (OB3) was signed into law on July 4, 2025. There will be significant changes to federal student aid programs that affect borrowing limits, loan types, repayment options, among other provisions after July 1, 2026.

What you should know as an incoming student

For students beginning their graduate education in fall 2026, Graduate PLUS Loans will be eliminated. Law students will only be able to borrow Federal Direct Unsubsidized Loans. The new annual limit for JD students allows them to borrow up to $50,000 per academic year. LLM and SJD students can borrow up to $20,500 per year. A Free Application for Federal Student Aid (FAFSA) will still be required.

Lifetime borrowing limits will also change. JD students will have a cap of $200,000. LLM and SJD students will have a cap of $100,000. The overall federal limit, including undergraduate loans, will be $257,500.

If your cost of attendance exceeds these federal limits, you may need to consider private loans. Private loans differ from federal loans in several ways, including interest rates, repayment options, and do not qualify for programs like Public Service Loan Forgiveness (PSLF). Private lending might require a strong credit score or a cosigner and may carry higher long-term costs. Private loans are not eligible for Public Service Loan Forgiveness. Private loans also cannot be consolidated with federal loans. The University of Iowa Office of Student Financial Aid provides a preferred lender list, but students are encouraged to compare terms across multiple lenders and maximize federal loan eligibility before turning to private options. For questions about private loans, please contact our office at [email protected].

Students who are not U.S. citizens or eligible non-citizens cannot borrow federal loans and may need a creditworthy cosigner for private loans. Each lender will have information on whether a co-signer is required.

What you should know as a current JD student

Students who borrow federal loans for their current degree program before June 30, 2026, will retain access to existing loan programs for up to three years or until they complete their program. This includes the current annual limit of $20,500 for Unsubsidized Loans and Graduate PLUS Loans up to the cost of attendance. These students will also be held to the original aggregate loan limits, $138,500 for the Unsubsidized Loan and no aggregate limit for the Grad PLUS.

Loan Proration

Students registered for less than full-time, completing less than 20 hours for the academic year, will have their loans adjusted to a percentage based on their registered hours.

Repayment changes all students should know

Two new repayment plans will be introduced for loans disbursed on or after July 1, 2026. The Standard Plan offers fixed repayment terms of 10, 15, 20, or 25 years based upon the amount borrowed. The Repayment Assistance Program (RAP) is an income-based plan where monthly payments range from 1% to 10% of income over a 30-year term.

Borrowers with new loans after July 1, 2026, will only have access to these two plans. Current borrowers without new loans can continue using existing plans, such as Standard, Graduated, Extended, or Income-Driven options, until July 1, 2028. They may also opt into the RAP.

Other financial options to consider

Students can explore payment plans through UI University Billing, external scholarships such as those listed in the AccessLex Scholarship Databank, or other borrowing options like personal loans.

Your next steps Complete your Free Application for Federal Student Aid (FAFSA) as usual.
Stay informed about updates.
Determine a budget and how much borrowing may be needed.
Contact the Iowa Law Office of Financial Aid by email at [email protected] for personalized guidance. Frequently asked questions
What if I need more than $50,000 per year?

You may need to apply for a private education loan. Contact our office at [email protected] for guidance.

Do current students need to do anything?

If you borrowed federal loans for law school before June 30, 2026, you keep access to current federal loan programs for your entire program (up to three years). If you have not borrowed a federal loan for law school prior to July 1, 2026, you will not have Graduate PLUS Loan eligibility. Contact our office at [email protected] if you’d like to borrow a loan during 25-26 to qualify for the legacy provision.

Does Public Service Loan Forgiveness (PSLF) still apply?

Yes, PSLF remains available for eligible federal loans. However, private loans differ from federal loans in several ways and do not qualify for PSLF.