Federal Aid Changes

What’s Changing?

The OB3 law includes significant changes to federal student loans, borrowing limits, and repayment options. Many of these provisions require additional federal regulations before they can be fully implemented. The U. S. Department of Education is currently completing that process. Because the federal rulemaking process is ongoing, this page will be updated as new information becomes available. For the most up-to-date information from the Department of Education, please visit Federal Student Aid’s OB3 Updates page.

Learn more about how the changes will impact:

• Student borrowing
• Parent borrowing
• FAFSA
• Pell Grants
• Protection for existing borrowers
• Earnings accountability standard

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Key Rule Changes and Comparison Charts

Student Borrowing

Before July 1, 2026, students could borrow federal loans for as long as they were enrolled. After July 1, 2026, loan eligibility is based on how long your program is supposed to take. A two-year program gets roughly two years of borrowing – even if the student takes longer to finish.

This matters most for part-time students. Taking 9 units per term instead of 15 can stretch a two-year program into four years. The loans run out after two years either way.

Plus, new borrowers enrolled less than full time (fewer than 12 units) can only borrow in proportion to their unit load, similar to how Pell Grants already work.

Loan Type	Note	Rules Before July 1, 2026	Rules After July 1, 2026
Undergraduate loans (subsidized and unsubsidized)	Little to no change	$5,500 to $7,500 per year depending on year in school. $31,000 lifetime cap for dependent undergrads.	Annual and lifetime limits unchanged
Graduate student loans	Major change	$20,500 per year. $138,000 aggregate undergrad. Plus unlimited Grad PLUS up to cost of attendance	$20,500 per year. New $100,000 lifetime cap on graduate borrowing. Grad PLUS eliminated. This doesn’t affect most Sierra College students directly, but students with transfer and graduate school goals need to know before they get there.
Professional student loans (medicine, law, pharmacy)	Major change	$20,500 per year. $138,500 aggregate. Plus unlimited Grad PLUS up to cost of attendance.	$50,000 per year. $200,000 lifetime cap. Grad PLUS eliminated.
Lifetime federal loan cap (all student borrowing combined)	New Rule	No single unified lifetime cap across all federal student loan types.	$257,500 total across undergraduate, graduate, and professional loans combined.
Part-time loan amounts	Major change	A part-time student could borrow the same amount as a full-time student.	Loan amounts prorated based on unit load. Half-time students get roughly half the amount.
Loan eligibility duration	Major change	Students could borrow for as long as they remained enrolled in 6 or more units and met all other criteria.	Loan eligibility tied to program length. A two-year program gets two years of loans even if you have not completed your program.

Parent Borrowing

Parents can now borrow a maximum of $20,000 per year and $65,000 total per child, across all years. Previously there was no cap. Because Sierra’s cost of attendance is low, many families won’t hit this ceiling. But families planning for transfer to a four-year school need to factor this into their long-term plan.

Please note that students who are not California residents (view California Residency Requirements) do get charged differently. If you planned to use the option of taking out a Parent PLUS loan to cover those additional costs, be aware there are now annual loan limits. You can no longer borrow up to the cost of attendance.

Loan Type	Note	Rules Before July 1, 2026	Rules After July 1, 2026
Parent PLUS loans	Major Change	Parents could borrow up to the full cost of attendance minus other aid, every year. No annual cap. No lifetime cap.	$20,000 per year per child. $65,000 lifetime cap per child. Cap follows the student, not the school.

FAFSA

Beginning April 26, 2026, the federal government added a new step to the Free Application for Federal Student Aid (FAFSA) process to protect students from identity fraud. From this date forward, random applications will be selected for an identity check.

Being selected for an identity check does not mean you did anything wrong on your application. The identity checks are only being added to improve security and reduce fraud.

How will the identity checks work?

If your application is selected, you will receive a request to verify your identity by completing a short (just a few minutes) live camera check on your phone or tablet from Federal Student Aid (FSA). Be prepared to show a valid government-issued ID. Most applications will not be selected for a check.

If you get a verification request, respond to it right away. Waiting can delay your financial aid. If you don’t have a phone or tablet with a camera, contact the Financial Aid Office to discuss options.

What should you do now?

If you have already submitted your 2026-2027 FAFSA, watch your email for any verification requests and respond promptly.

Loan Update	Note	Rules Before July 1, 2026	Rules After July 1, 2026
Identity verification	New Rule	Standard FAFSA submission. Verification only when flagged, typically through paperwork.	Real-time identity screening tiers applicants into four risk levels. High-risk applicants must complete live camera verification on a phone or tablet. View our FAFSA Verification FAQs. The California Dream Act Application (CADAA) will not be impacted.

Pell Grants

Short-term career training programs will eventually be eligible for Pell funding. Sierra’s programs still need to go through a federal approval process that takes a year or more. We will communicate when specific programs qualify. For now, the message is honest: it’s coming, stay tuned.

Loan Type	Note	Rules Before July 1, 2026	Rules After July 1, 2026
Pell eligibility	Moderate Change	Available based on financial need (Student Aid index). Less-than-half-time students qualified for partial Pell.	Students with non-federal aid covering full cost of attendance no longer qualify. New high-asset and foreign income exclusions.
Workforce Pell (short-term programs)	New Program (Not yet available at Sierra College)	Pell could not be awarded for programs under 16 weeks.	Pell available for approved workforce programs 8 to 15 weeks, 150 to 600 clock hours. Programs must meet federal completion and job placement requirements. Approval takes a year or more.

Protection for Existing Borrowers

Students who were enrolled and borrowing before July 1, 2026, keep their old loan limits for up to three years, or until they finish their program, whichever comes first. This is called the legacy provision. They lose this protection if they withdraw, transfer to a different program, or stay enrolled past their program’s expected length.

Loan Update	Note	Rules Before July 1, 2026	Rules After July 1, 2026
Legacy provision (interim exception)	New Rule	Not applicable. The current rules are simply the rules.	Students enrolled with at least one federal loan disbursed before July 1, 2026, can continue under old rules for up to 3 years or until program completion. Protection lost if student withdraws, transfers programs, or exceeds program length.

Degree and Certificate Programs Will Now Be Held to an Earnings Accountability Standard

If a major for a degree or certificate program doesn’t earn more than a typical high school graduate without a degree or certificate in that field, the new federal laws may not pay aid for those majors. The federal law now benchmarks these earnings against state and national averages. View our gainful employment data.