In July 2025, Congress passed H.R.1, a federal law that makes several changes to student financial aid and federal student loans. Most provisions do not take effect until July 1, 2026, and some include protections for students who are already borrowing.

Most changes primarily affect students who borrow federal loans or apply for financial aid beginning in the 2026–27 academic year. Current financial aid offers and eligibility for the 2025–26 academic year are not impacted by these changes.

Federal guidance is subject to change, and Cabrillo College will update this page as additional implementation details become available. This summary is based on an analysis published by the National Association of Student Financial Aid Administrators (NASFAA). You can find the full analysis on the NASFAA news web page.

Pell Grants

Pell Grants will continue to be available for undergraduate students, including those enrolled less than half-time.

Starting July 1, 2026:

Students may not qualify for a Pell Grant if their Student Aid Index (SAI) is more than twice the maximum Pell Grant amount. For 26-27 this would be anything over an SAI of $14,790.

If other non-federal grants or scholarships fully cover a student’s cost of attendance before their final Pell Grant disbursement, the student may no longer be eligible to receive the remaining Pell funds for that year.

Foreign income will be included when determining Pell Grant eligibility.

The law also adds federal funding to help maintain the current maximum Pell Grant amount, which is intended to stabilize the program.

Undergraduate Student Loans

Undergraduate federal loan limits are not changing.

Current limits for annual and total borrowing remain in place.

A new lifetime federal student loan cap of $257,500 applies across all federal loans (this does not include Parent PLUS loans).

Loan Proration for less than full-time students

For Direct Loans packaged and originated for the 2026–27 academic year, a student’s annual loan limit must be adjusted if they enroll less than full-time (also known as a schedule of reductions or proration).

This requirement applies to all undergraduate, graduate, and professional student Direct Loan borrowers, including Direct Subsidized Loans, Direct Unsubsidized Loans, and Graduate PLUS Loans (for legacy borrowers). Parent PLUS Loans are not subject to these adjustments.

More information will be shared as it becomes available.

Student Loan Repayment

Federal repayment options will depend on when your loans are taken out.

For loans first borrowed on or after July 1, 2026:

Repayment options will be limited to:

• A new standard repayment plan with fixed monthly payments.

• A new income-based plan called the Repayment Assistance Plan (RAP).

For borrowers with no new loans after July 1, 2026:

• Current repayment plans may remain available.

• Borrowers in certain existing plans will need to switch plans by July 1, 2028.

Under Repayment Assistance Plan (RAP):

• Monthly payments are based on income and family size.

• A $10 minimum monthly payment applies.

• Some deferment options will be more limited in the future.

Steps Students Can Take Now

You do not need to take immediate action, but planning ahead can help.

• Review your financial aid offer and borrowing plans for 2025–26.

• If you are considering federal loans, be aware that borrowing before July 1, 2026, may allow you to remain under current rules for your program.

• Keep copies of your financial aid and loan records.

• If you expect to use income-based repayment in the future, check your repayment plan periodically once you enter repayment.

Cabrillo College Financial Aid and Scholarships staff are available to help students understand how these changes may apply to their individual situations.

Students From Mixed-Status Families

This law does not change eligibility for federal student aid for eligible students from mixed-status families.

Parents without Social Security numbers can still complete their portion of the FAFSA. However, other federal benefits and tax credits may be affected for families more broadly.