As social media is full of first day photos, it’s hard to believe Free Application for Federal Student Aid (FAFSA®) season is (literally) right around the corner. The U.S. Department of Education has confirmed that the full release of the 2026-2027 FAFSA will be October 1.
Let’s go over about what to expect, how to prepare, and how financial aid changes may affect your college budget.
The 2026-2027 FAFSA® Changes
The 2026-2027 FAFSA will not have many changes from last year. It’s important that families understand and continue with the concept of FAFSA Contributors. A FAFSA Contributor is an individual, typically a parent, a spouse of a parent, or a spouse, who will be required to provide information on the student’s FAFSA.
The FAFSA Simplification changes required all family businesses, regardless of size, to be reported as an asset on the FAFSA. The One Big Beautiful Bill, known as H.R. 1 has now reversed that change after receiving backlash on the change to asset reporting. Small family businesses with 100 or fewer full-time employees, farms where a family resides, or a commercial fishing business, are not required to be reported as an asset on the 2026-2027 FAFSA.
There was also a correction made in the calculation of awarding Federal Pell Grants. After the new Pell Grant awarding calculation was implemented due to the FAFSA Simplification Act, financial aid administrators were concerned when students with high Student Aid Index (SAI) values were receiving Pell Grant awards. In the 2026-2027 award year, students whose SAI is double the maximum Pell Grant award, will not be eligible for any federal Pell Grant funds. As we know, the higher SAI, the lower financial need the student and their family has.
How to Prepare for the FAFSA®
It’s time to prepare for the 2026-2027 FAFSA.
- Make sure you have your FSA ID. If you have never created one, go to StudentAid.gov to get the process started. Students and each FAFSA Contributor needs an FSA ID. If you already have an FSA ID, confirm you know your login credentials. This can be done ahead of time, and you do not need to wait until October 1.
- Gather the necessary documents. While you are required to authorize the FAFSA to pull information your income information from the IRS, there is a chance you may need to input all your financial information manually. It’s best to know where you can access your tax transcripts, and you should pull together your asset information.
- Set up a date and time to complete the FAFSA. Students and FAFSA Contributors should establish a schedule on when they plan to complete the FAFSA. It will make it easier if everyone is on the same page. Students are only able to complete their student sections, each FAFSA Contributor must login and complete the sections relevant to them. The student and each required FAFSA Contributor must sign and submit the FAFSA for processing to being.
Start Planning Your 2026-2027 College Budget
Now it’s time to get your budget together. There are some changes that will be affecting financial aid for the 2026-2027 year. There are new loan limits that students and parents should be aware of, especially if their student is starting a new program in the 2026-2027 year.
Student Starting a New Program in the 2026-2027 Academic Year
If you are completing the FAFSA to start a new program on or after July 1, 2026, financial aid options may look a bit different.
Parent PLUS Loans in 2026-2027 Academic Year
Parent’s who want to borrow Direct PLUS Loans to help fund their dependent undergraduate student’s education, there are some changes that came out of H.R.1 that will limit your ability to borrow Direct PLUS Loans.
Beginning on July 1, 2026, a child can only receive a maximum of $20,000 in Direct PLUS Loans borrowed by their parent(s) each year. And overall, the total amount (or aggregate) a student can only receive is $65,000 in Direct PLUS Loans borrowed by their parent(s). While we are still waiting for a full explanation of how this will be implemented, parents should understand those restrictions if they were planning to borrow a Direct PLUS loan for their child.
In addition, if a parent has borrowed other federal student loans before July 1, 2026, if they decide to borrow a Direct PLUS loan after July 1, 2026, all their loans will need to be repaid under either the new Standard Plan or the Repayment Assistance Plan (RAP), which were created in the H.R. 1 bill.
Graduate and Professional Students
Graduate and professional students starting a new program on or after July 1, 2026, you need to be aware of the changes in H.R. 1 that will affect your ability to borrow. Beginning on July 1, 2026, graduate and professional students will have new Direct Unsubsidized Loan annual and aggregate limits. In addition, there will no longer be an option to borrow a Direct PLUS Loan as a graduate or professional student. These changes need to be understood, as you begin to create your budget.
Program Loan Limits
For all students, schools will be able to set program loan limits. Meaning, they may be able to limit the total amount you can borrow in federal student loans. This would be a school decision, for an entire program.
For example, if your total cost of attendance is $10,000. You could be awarded a Pell Grant in the amount of $5,000. If the school sets a loan limit for your program of $2,500, you will not be able to borrow the full amount in federal student loans and you may be left with a $2,500 gap in financial aid.
Loan Proration Based on Enrollment
Your school is now required to prorate your federal student loans based on your enrollment. If you are not enrolled in enough credits to be considered full-time, your school must prorate your federal student loan to match your enrollment. For example, if a student is eligible to receive $5,000 in federal student loans enrolled full-time, a student who is enrolled half-time would only be eligible to receive $2,500 in federal student loans.
The 2026-2027 Academic Year and Beyond
H.R. 1 has made many changes to the way federal student aid works. For students who started their programs before the 2026-2027 academic year, you may be eligible to be grandfathered into the current rules, relating to loan limits. However, loan proration or program loan limits may create other obstacles in your budget.
There is still more to be understood. The law just passed this past July 4. It’s extremely important for students and parents to stay informed about how these changes can impact your college financing plan.
