Jul. 31—Students at Calhoun and Athens State can expect changes in federal student loans and grants made by the One Big Beautiful Bill Act starting next year, and Alabama’s nearly 660,000 federal student loan borrowers currently in repayment may see more immediate effects.
Calhoun Community College Director of Student Financial Services Melissa Creasy said the college cannot yet predict how many current students will be directly affected. For the previous school year, Calhoun dispersed over $28 million in federal aid.
President Donald Trump’s One Big Beautiful Bill Act (OBBBA), which he signed into law July 4, outlines changes for new federal loan limits, the elimination of certain federal loan types, loan repayment, and loan and Pell Grant eligibility.
“President Trump’s One Big Beautiful Bill is a historic win for students, families, and taxpayers,” said the Acting Under Secretary for the Department of Education James Bergeron in press release from the department.
Like other sections of the bill, public reception to student loan changes has been mixed. Denise Forte, president and CEO of the left-leaning EdTrust, called the bill a “full-scale assault on educational opportunity and economic fairness” in a statement.
According to the Free Application for Federal Student Aid (FAFSA) data for the 2025 — 26 cycle, approximately 34,000 students in Alabama from the high school graduation class of 2025 have applied for federal student aid. The application is open for 15 months for any given academic year. The most recent data is through July 18.
Locally, more than 1,500 recent graduates from Morgan, Limestone and Lawrence counties have submitted an application for the upcoming school year. Starting with the 2026 — 27 school year, federal loans that these college freshmen or future students borrow will be subject to borrowing caps and have just two repayment plan options. — Pell Grant changes
Creasy, Calhoun’s financial services director, said that Calhoun students’ Pell Grant eligibility could be affected.
Each year 36% of Calhoun students receive Pell Grants, totaling approximately $18 million, according to Creasy. More than 100,000 students in Alabama received a Pell Grant for the 2023 — 24 school year, according to the Education Department. Unlike loans, Pell Grants don’t need to be repaid. These disbursements make up the majority of federal aid Calhoun students receive.
Starting July 1, 2026, students won’t be eligible for a Pell Grant if their student aid index — which is determined by the FAFSA — is twice or more than the maximum Pell Grant amount for the year. For example, using the maximum amount of $7,395 for the 2025 — 26 award year, someone with a student aid index of $14,790 or higher wouldn’t qualify for a Pell Grant. The index determines the amount of aid a student may qualify for by deducting annual living expenses from financial resources.
The bill also increases the amount of funding available for Pell Grants by nearly sixfold, addressing a funding shortfall, according to Bergeron’s statement.
Athens State University disbursed Pell Grant funds to 1,467 students in the 2024 — 2025 academic year, totaling more than $7 million, according to its Financial Aid Office.
Athens State Public Relations Manager Lauren Blacklidge said a large number of part-time students depend on Pell Grants.
“On a positive note, earlier versions of the proposed legislation included changes to the definition of full-time enrollment for the Federal Pell Grant program and the elimination of Federal Pell Grants for less-than-half-time enrollment,” Blacklidge said. “Although these provisions may seem minor, preserving the current Pell Grant structure is a significant win for Athens State students.”
OBBBA also introduces a Workforce Pell Grant, which can be awarded to students in a short-term educational program — lasting between eight and 15 weeks. Such programs should qualify as “high-skill, high-wage,” according to OBBBA. The grant will first be available starting July 1, 2026.
“We don’t have the details and the requirements, but hopefully there will be something in it for Calhoun students,” Creasy said. “Hopefully they will be able to qualify for funding through that new program.”
Calhoun offers certificate programs in 24 areas of study. It is unclear at this time how many of those programs would be Workforce Pell eligible. — Borrowing limits
Blacklidge said caps on Parent PLUS loans, the elimination of Graduate PLUS loans and lifetime loan caps will also affect Athens State students.
Starting July 1, 2026, parents can only borrow up to $20,000 per year per dependent enrolled in an eligible higher education institution and a maximum aggregate amount of $65,000 on behalf of each child through the Federal Direct PLUS loans.
“While only a small number of parents currently pursue Parent PLUS loans for their children, imposing annual or aggregate limits could create affordability gaps for these families,” Blacklidge said of Athens State. “This may increase retention risks and place additional pressure on institutional aid resources to help cover unmet need.”
The bill also establishes an annual borrowing limit of $20,500 for graduate students not enrolled in a professional program, such as medical, law and business schools. Professional students can borrow up to $50,000 per year. Aggregate borrowing limits are also created for graduate school. Starting July 1, 2026, graduate students are capped at $100,000 total. Professional students can borrow up to $200,000.
Furthermore, OBBBA eliminates the Grad PLUS loan, which previously allowed graduate and professional students “to cover any costs not already covered by other financial aid or grants, up to the full costs of attendance,” according to the Consumer Financial Protection Bureau.
“Eliminating the Graduate PLUS program could severely affect our graduate students who have already borrowed up to their unsubsidized limits, forcing them to rely on private educational loans to complete their degrees,” Blacklidge said. “For context, we have consistently awarded Graduate PLUS loans over the past two years, making this a critical funding source for many of our students.”
Athens State gave out $438,565 in combined Parent PLUS and Grad PLUS loans last year to 56 different students.
The lifetime maximum federal borrowing cap for a student is set at $257,500 for combined undergraduate and graduate loans, as well.
“Lifetime loan caps could hinder degree completion for transfer students, adult learners, and those pursuing multiple degrees, increase drop-out risks, and create a greater need for proactive financial aid counseling,” Blacklidge said. — Other changes
Alabamians could see more immediate changes from OBBBA’s restructuring of loan repayment and forgiveness.
The bill has halted regulations from the Biden administration concerning borrowers’ defense to repayment. The regulations were controversial and a court blocked them from taking effect pending a final decision.
Also contested in court, the Saving on a Valuable Education (SAVE) Plan begins accruing interest Thursday after roughly a year in forbearance.
Loans disbursed after July 1, 2026, will only have two repayment options: the Standard Repayment Plan and an income-based Repayment Assistance Plan, which will replace multiple current income-contingent plans. People previously ineligible for financial hardship can now qualify for income-based repayment.
Interest subsidies and principal matching are created to help borrowers using the Repayment Assistance Plan pay off loans. The bill also eliminates deferment for any loans made after July 1, 2027, and sets restrictions for forbearance.
In a subsection titled “Accountability,” OBBBA calls for an evaluation of the return on investment of degree programs. If a particular program doesn’t yield a higher median annual income for a degree holder than for someone with a lower level of education, it could become ineligible for federal student loan disbursement.
— GraciAnn.Goodin@DecaturDaily.com or 256-340-2437
