Student Loan Changes You Need to Know
By Aaron Thomas
Navigating the world of Financial Aid can be a daunting task for students of all backgrounds. Staying up to date with available programs and resources is vital in times where the landscape of educational funding is shifting.
Following the passage of the Big Beautiful Bill this July, several notable changes have been made to financial aid and student loan programs that will affect students in the coming years.
Current students may need to reassess certain aspects of their financial planning, and incoming students in the coming years will have different available options.
Ashley Munro, UAF Financial Aid Advisor, sat down with The Sun Star to give students insight into navigating these changes. While students will not be affected this coming fall semester, the changes will reshape much of the financial aid and student loan processes in 2026 and beyond.
With the changes outlined in the Big Beautiful Bill, one of the most adversely affected demographics will be graduate students—particularly those who are part time. The Graduate Plus loan program is being eliminated, which allows students to borrow more than Federal Direct loans when they do not fully cover the cost of attendance. Federal Direct loans allow graduate students $20,000 a year to cover the cost of education, which may be insufficient for certain graduate students. Loan programs may no longer have eligibility for Direct Loans if a borrower fails “low earning outcome” metrics for two consecutive years.
Additionally, the Graduate Unsubsidized loan cap has also been reduced from $138,000 to $100,000, reducing the total amount that graduate students can borrow. Loan amount will also be prorated for part time graduate students. Because many Alaskan students tend to take longer to get a degree, advising will be tailored to get students through college as fast as possible before the cap is reached.
Repayment plans for new borrowers will also change in the coming year. After July 1, 2026, programs such as the Income-Contingent Repayment Plan, or ICR, Pay As You Earn Program, or PAYE, and Saving On a Valuable Education, or SAVE, will become unavailable to students applying for loans. For students who are currently enrolled in these programs, they have until July 1st, 2028 to transfer to either the Income-Based Repayment (IBR), Repayment Assistance Program (RAP), or a standard repayment plan. The new standard repayment plan will have payments based on 10, 15, 20, and 25 year terms.
Munro says dependent students from out-of-state will also be affected. The Parent Plus loans that are often utilized by students from the lower-48 now have annual and lifetime limits with less options for repayment. Students who borrow from Parent Plus loans after July 1, 2026 will not have access to the Repayment Assistance Program (RAP), and must repay their loans through the standard plan.
Several changes have been made to Pell grants. Overall awards will be reduced when total financial aid exceeds the cost of attendance, which has never been the case historically. Pell grants will also no longer be available to students with extremely high student aid indexes.
Munro said that many part-time students are already financially struggling to go fulltime, with many of them supporting families and working other jobs to pay their living expenses. Nearly all scholarships at the state level are geared toward full time-students, so there will be a lack of support for the part-time students who hit their loan caps before they graduate or are unable to cover the cost of their tuition with the use of scholarships.
Another issue with navigating financial aid changes is that implementation of many aspects of the Big Beautiful Bill are still being drafted by the Department of Education. UAF plans to reach out to impacted students in October to open channels of communication, but there is little that can be done until all implantation plans are finalized.
One positive change is that small businesses and family farm assets will be excluded from the Student Aid Index. Additionally, some occupational endorsement programs at the Community Technical College (CTC) may become eligible for Pell grants.
Another change in financial aid unrelated to the Big Beautiful Bill is that around nine months ago, COVID flexibility for student loan repayment ended. This has led to a significant increase in students across the nation who are about to default on their loans—one in three lenders according to The Guardian.
When a student defaults on a loan, they may have their wages and PFD garnished. A loan default also renders them unable to qualify for financial aid in the future and significantly decreases credit score.
The Big Beautiful Bill also sunsets the economic hardship and unemployment deferment options for student loans. Borrowers who enter a loan before July 1, 2027 will still be grandfathered into these options, but they will no longer be available for new borrowers.
The rules for loan forbearance have also changed. The current system allows for loan forbearance for up to twelve consecutive months, with a total cumulative maximum of three years. The new system which goes into effect July 1, 2027 will allow up to nine months forbearance in any given two-year period. Borrowers who have defaulted on loans will now be able to rehabilitate the loan twice, instead of once under the current rules.
In the face of uncertainty, there are several sources of financial aid that will remain stable in the coming years. The Alaska performance scholarship was recently reaffirmed by state legislators, with the total amount of aid nearly doubling. UAF has also continually supported the Nanook pledge scholarship over the past five years and will continue to do so. However, for recipients of these scholarships, Pell grant disbursement will be recalculated and may be reduced.
Munro recommended that concerned students should meet with a financial advisor, which are available at the Student Success Center, the CTC, or the Kuskokwim Campus. UAF also offers financial literacy courses to help students navigate budgeting, credit scores, and other strategies for financing their college education. Emergency scholarships are available to students who are in crisis, with a board accepting applications on a rolling basis. In September, UAF will be launching a Big Beautiful Bill website to provide additional informational resources to students. Online forums such as Reddit’s r/Studentloans can provide additional information from other students that have encountered similar issues.
It is still too early to understand the full scope of impact that these changes will have, as many will be at the individual level. That being said, Munro believes that we will see a decline in part-time graduate students and dependent students from the Lower 48.
People who utilize student loans should stay up to date with their advisors on the implementation plans that are currently being drafted by the Department of Education. There may still be changes in the coming year and if questions arise, the Financial Aid Advisors at UAF will be happy to walk anyone through questions and issues regarding financing college.
The Financial Aid Office is located in the Eielson Building in room 107, or can be reached at (907) 474-7256.
Sam Kubina, UAF First-Year Financial Aid Advisor skubina2@alaska.edu
Elisha Cohen, UAF Financial Aid Advisor ejhoward@alaska.edu