FAFSA Changes were announced this week for the 2026-2027 academic year. StudentAid.gov announced the free application form is in beta testing and is scheduled to be released Oct 1st. The 2nd phase of beta testing is underway through September 2025.
Anyone can request to be a beta tester. Otherwise, you can submit your application form once it becomes available to the public by October 1st. Take note of these changes to help you plan for undergraduate and postgraduate education expenses.
How to Prepare for 2026-2027
If you’d like to get ready to complete the 2026–27 FAFSA form as soon as it’s available, here are some ways you can get ready.
- Create a StudentAid.gov account (if you don’t already have one).
- Learn about the documents you may need to fill out the FAFSA form.
- Determine your dependency status and whether your parent(s) or spouse will be required to contribute information on your FAFSA form.
- If you’re a dependent student, use the Who’s My FAFSA Parent? wizard to identify which parent(s) will be a required contributor on your form.
Image by 3D Animation Production Company from Pixabay
Loan Limit Changes
The budget cuts passed this summer will impact borrowing moving forward.
- For undergrad applicants, new borrowers will have a lifetime limit of $257,500.
- For the Parent PLUS loan program, parents will only be able to borrow $20,000 per dependent each year or a total of $65,000 per dependent. However, if students are already receiving loans (before July 1, 2026), they will be able to continue without the new Parent PLUS caps through the end of their college years.
- Schools can now enforce specific loan limits for certain programs.
Impact on Graduate Students
- Graduate and professional students should be aware of the federal student loan limits taking effect on July 1, 2026. This is a critical change for post-graduate students planning for the 2026–2027 school year or beyond.
- The Graduate PLUS loan program will be eliminated for new borrowers after July 1, 2026, and new annual and aggregate (lifetime) borrowing limits will be imposed. This program previously allowed graduate students to borrow up to their school’s full cost of attendance.
- New annual and aggregate loan limits for new borrowers:
- Graduate degrees (e.g., M.A., Ph.D.): The annual borrowing cap will be $20,500, with an aggregate lifetime limit of $100,000.
- Professional degrees (e.g., J.D., M.D.): The annual borrowing cap will be $50,000, with an aggregate lifetime limit of $200,000.
- Legacy provision for existing borrowers: If you have received a federal direct loan before July 1, 2026, you may be exempt from the new borrowing caps for a limited time.
- Combined limit for dual programs: Students who enroll in both graduate and professional degree programs will have a combined aggregate limit of $200,000.
- Loan proration for part-time students: A student’s loan eligibility will be prorated based on their enrollment level if they are enrolled less than full-time.
- Eligibility for existing graduate student borrowers
- Current graduate students who borrowed a Federal Direct Loan before July 1, 2026, may have “legacy protection” that extends their access to loans under the prior rules.
- Who is eligible: Students enrolled in a program who have had a Direct Loan (including Grad PLUS) disbursed before July 1, 2026.
- Loan availability: These students can continue to borrow under the old loan limits for up to three academic years or for the remainder of their expected time to credential, whichever is shorter.
- Changes to repayment plans. These changes apply to any borrower who takes out a new federal loan on or after July 1, 2026.
- Overhaul of Income-Driven Repayment (IDR): All existing IDR plans, such as SAVE, PAYE, and ICR, will be terminated for new loans disbursed after this date.
- New repayment plan options: Federal loans taken out on or after July 1, 2026, can only be repaid under two plans:
- Key FAFSA changes for 2025–2026
- The 2025–2026 FAFSA will be very similar to the 2024–2025 version, building on the FAFSA Simplification Act reforms.
- Fewer questions: The form will continue to be significantly shorter, with no more than 46 questions.
- IRS Direct Data Exchange (DDX): You and any “contributors” must consent to the automatic retrieval of tax data directly from the IRS. This replaces the old IRS Data Retrieval Tool and is required for federal aid eligibility.
- Contributors and FSA ID: A “contributor” is anyone required to provide financial information, such as your spouse. Each contributor must have their own FSA ID to complete their portion of the FAFSA.
- Calculation of aid and terminology
- Student Aid Index (SAI): The Expected Family Contribution (EFC) has been replaced by the Student Aid Index (SAI). The SAI is an index number used to determine eligibility for need-based aid. A negative SAI is now possible, allowing for a more accurate assessment of financial need.
- No “sibling discount”: The number of family members in college is no longer a factor in calculating the SAI. This means graduate students from families with multiple students in college may receive less financial aid than in previous years.
Image by Peggy und Marco Lachmann-Anke from Pixabay
Planning for Changes
When there are so many changes to federal policy and programs, how can you plan? It can feel as if you’re in a maze of this way, that way, go forward, go back. The best word I can think of is “adaptive”!
Several provisions of the 2017 Tax Cuts and Jobs Act (TCJA) are set to expire at the end of 2025. In lieu of speculation, let’s wait for the facts to determine what the impact is and how it will affect you personally. Areas to watch are: Tax Rates; Estate, Gift, and Standard Deductions; Business pass-through tax changes.
Keep informed about inflation and interest rates that impact your debt, savings, and investments. Healthcare changes to policies, programs, services, and costs are forecasted. This is a big deal for everyone.
Professional services people in the financial, healthcare, and tax planning spaces are the go-to people for your personal and business planning. Your overall contingency preparation and planning is where I come in!
Send me an Email or Book a Time with Lynn if you have any questions or would like to connect via Zoom to discuss your particulars.
For additional information about my work, check out @ The Living Planner or @ The Living Planner. If you’re up for pre-planning, my book is a resource for you. The Living Planner What to Prepare Now While You Are Living © Check it out HERE.
Quote for the week: “The time to repair the roof is when the sun is shining” – John F. Kennedy.
Let’s go check the roof! Lynn
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