ED Publishes FAQ Addressing New OBBBA Loan Limits, Questions Remain
By Jill Desjean, Director of Policy Analysis , Megan Walter, Senior Policy Analyst
The Department of Education (ED) released a FAQ document on Thursday, addressing the new loan limits established under the One Big Beautiful Bill Act (OBBBA), which take effect July 1, 2026. The document covers six topic areas: eligibility for the interim exception to the post-July 1 loan limits; calculation of the expected time to credential (ETTC); general loan limit mechanics; graduate and professional student loan limits; Parent PLUS loan limits; and the new $257,500 lifetime maximum aggregate loan limit. Notably, the FAQ does not contain any questions about loan adjustments for less-than-full-time enrollment and the schedule of reductions formula.
Many of the questions in the FAQ have already been answered publicly in other forums. This article focuses on areas that have not yet been publicly addressed, where NASFAA has been seeking clarification, and where questions remain outstanding. Financial aid administrators should read the full FAQ, as it contains important operational details beyond what is covered here.
ED noted that the FAQ will be updated periodically with new and revised questions flagged accordingly.
The FAQ document confirms and clarifies several issues where the regulatory text alone is insufficient to address specific situations. However, there are some areas where ED’s responses are unclear, leaving some outstanding questions unresolved and raising new ones.
Eligibility for Interim Exception
In the FAQ document, ED confirms several issues related to borrower eligibility for the interim exception to the new student loan limits that become effective July 1, 2026. Those include confirmation that:
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There is no minimum enrollment requirement for students to initially qualify for or to maintain the interim exception during the student’s expected time to credential. So, a student enrolled in less-than-half-time status as of June 30, 2026, would be eligible for the interim exception provided they meet the other eligibility criteria and, if they drop to less-than-half-time enrollment status on or after July 1, 2026, this would not cause them to lose interim exception eligibility so long as they continued to meet the other eligibility criteria.
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Students do not have to be registered for fall 2026 classes to be considered eligible for the interim exception, as long as they are enrolled in a program of study as of June 30. ED also clarified that for the purposes of the interim exception, a student is considered “enrolled in a program of study” if they are a degree-seeking student “in good standing” and have not graduated or officially withdrawn.
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Students impacted by a school closure who enroll at a teach-out institution in the same program retain eligibility for the interim exception. ED notes COD is designed to handle this scenario, and treats it consistently with how it handles mergers and changes of ownership.
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While ED confirmed student eligibility for the interim exception when the student’s school closes, and they enroll at a teach-out institution, it was in response to a question specifically about graduate students. While ED’s response appears to apply to all students, NASFAA will seek clarification to ensure that is the case.
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Students in joint degree programs (e.g., JD/MBA) who were enrolled in and received disbursements from both schools in 2025-26 qualify for the interim exception only for the program at the school they are enrolled in as of June 30, 2026.
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Students dually enrolled in two programs reported under both programs’ Classification of Instructional Program (CIP) codes maintain interim exception eligibility through their expected time to credential, though schools should report the highest credential’s CIP code in their CIP 1 field to avoid COD matching issues.
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Medical students taking a research year do not lose interim exception eligibility if the research year is required for the program and the student is not considered withdrawn.
Expected Time to Credential
On the expected time to credential calculation, ED provides several clarifying points, including that:
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Students do not need to have been continuously enrolled prior to July 1, 2026, to qualify for the interim exception. So, for instance, a student can have taken the fall 2025 term off and returned for the spring 2026 term and qualify for the interim exception so long as the student was enrolled as of June 30, 2026, and meets other interim exception eligibility requirements. As a reminder, after July 1, 2026, in order to maintain interim exception eligibility, continuous enrollment is required.
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Students whose graduation dates change, regardless of the circumstances that cause the change (including a change of major or failing courses), are not eligible to have their expected time to credential recalculated.
Common Origination and Disbursement (COD) System Processing
The FAQ document also provides some operational details about how the COD system will incorporate the loan changes, including:
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COD will be updated in June 2026 to flag students who established interim exception eligibility through borrowing prior to 2025-26 (i.e., students who did not receive a disbursement in 2025-26 but are otherwise eligible). Previously, ED had indicated that only students with loans for the 2025-26 year with an award end date on or after April 1, 2026, for the same school, would be automatically flagged. This change should reduce the number of manual requests financial aid administrators will have to make to COD to change the limited exception flag.
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Schools can request that COD manually update an incorrect interim exception flag by emailing a password-protected file listing affected students to COD. It is unclear whether the emailed file is a replacement for a phone call to COD or a supplement. NASFAA is seeking clarification.
As implementation of the OBBBA provisions continues ahead of the July 1, 2026, effective date, ED has created several new avenues for institutional support in addition to this FAQ. In the coming weeks, ED will host a series of virtual office hours and webinar presentations covering topics including loan repayment plans, the schedule of reductions, loan limits, and Workforce Pell, with sessions running through Mid-July. An in-person town hall at the Department of Education in Washington, DC, is planned with details to follow.
Stay tuned to NASFAA’s Today’s News for ongoing updates as additional guidance becomes available.
Publication Date: 5/22/2026
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