2026 changes to US Federal Student Loans
The 'One Big Beautiful Bill Act' (H.R.1) introduces changes to US Federal Student loans – particularly those available to graduate and professional students – along with parent borrowers.
Massey is reviewing the legislation and awaiting guidance from the US Department of Education. Most changes that impact US Federal Student Aid go into effect on 1 July 2026. This page will be updated as information becomes available.
This notice was last updated on 25 July 2025.
As a US citizen or resident, you're likely to get different types of federal loans to make your studies at Massey more affordable. The US Department of Education is your lender if you take out a federal loan as part of your financial aid package. Sometimes, these loans are known as Stafford Loans.
If you need to borrow money for your degree, apply for federal loans first. They have better interest rates and other benefits. If you still need money to study, you can look into private loans.
Federal Student Aid: Advantages of a federal student loan over a private student loan
Direct loans
There are 2 types of federal student loans – Direct Subsidised and Direct Unsubsidised. The loans have a limit on how much you can borrow each year and in total – the aggregate limit.
Federal Student Aid: Direct Subsidized and Direct Unsubsidized Loans
Direct subsidised loans
These loans are:
- low-interest loans for undergraduates
- based on your financial needs
- subsidised by the US Government, which pays the loan interest at certain times.
If you have a direct subsidised loan, the US Government pays your loan interest during:
- your studies, which must be at least half-time or 30 credits a semester
- the 6-month grace period after you finish your studies
- any deferment you agree with your lender.
You can get direct subsidised loans for up to 150% of the published length of your degree. This 'maximum eligibility period' is a condition of financial aid.
Meet financial aid conditions – maximum eligibility period
Check how long your degree is expected to take to work out your maximum eligibility period.
Direct unsubsidised loans
These loans are:
- for undergraduates, postgraduates and students taking professional qualifications
- not based on your financial needs.
With a direct unsubsidised loan, your loan interest starts when you first get disbursements of your loan money. You can choose to pay the interest monthly or add it to your total loan. If you add the interest to the amount you borrow – the principal – you pay back the interest when you start repayment.
Annual loan limit for undergraduates
Discover the most you could take out in federal loans for each year of an undergraduate degree. How much you can borrow depends on whether you are a dependent or an independent student.
Borrowing money as a dependent or an independent student
Dependent students
This table shows the maximum you can borrow in direct federal loans as a dependent student for each year of your degree. The sums are in US dollars.
| Year of study | Subsidised loan (USD) | Unsubsidised loan (USD) | Total loan limit for the year (USD) |
|---|---|---|---|
| 1st year | $3,500 | $2,000 | $5,500 |
| 2nd year | $4,500 | $2,000 | $6,500 |
| 3rd year and above | $5,500 | $2,000 | $7,500 |
Independent students
This table shows the maximum you can borrow in direct federal loans as an independent student for each year of your degree. The sums are in US dollars.
| Year of study | Subsidised loan (USD) | Unsubsidised loan (USD) | Total loan limit for the year (USD) |
|---|---|---|---|
| 1st year | $3,500 | $6,000 | $9,500 |
| 2nd year | $4,500 | $6,000 | $10,500 |
| 3rd year and above | $5,500 | $7,000 | $12,500 |
Annual loan limit for postgraduates
If you want to study a postgraduate degree, you:
- can take out only direct unsubsidised federal loans
- are classed as an independent student.
This table shows the maximum you can borrow each year in a direct unsubsidised loan. The sums are in US dollars.
| Year of study | Unsubsidised loan (USD) | Total loan limit for the year (USD) |
|---|---|---|
| 1st year and above | $20,500 | $20,500 |
Total loan limit for all students
This table sets out the maximum or aggregate limit of subsidised federal loans you can take out each year, depending on what kind of student you are. The sums are in US dollars.
| Student type | Subsidised loan (USD) | Total loan limit (USD) |
|---|---|---|
| Dependent undergraduate student | $23,000 | $31,000 |
| Independent undergraduate student | $23,000 | $57,500 |
PLUS loans
The federal government offers:
- Parent PLUS
- Graduate PLUS.
These loans don't have a yearly or total limit, but you can take out loans only up to the Cost of Attendance. The Cost of Attendance changes each year, so you may need to apply for a new PLUS loan each year.
Parent PLUS
The Parent PLUS loans are for parents and guardians of dependent undergraduate students.
If you are a parent or guardian applying for a Parent PLUS loan, you need to:
- go through credit checks
- give permission before your child gets funds for their living costs
- start repayments once the funds are given out because there is no deferment or grace period.
Graduate PLUS
Graduate PLUS loans are for students studying postgraduate or professional qualifications.
If you apply for a Graduate PLUS loan, you need to:
- go through credit checks
- start repayments as soon as you complete your degree, withdraw from your qualification or start studying less than half-time – under 30 credits each semester.
Private study loans
You can apply to private lenders for loans to cover your education costs. You may want to think about private study loans if:
- your federal loan doesn't cover your full study and living costs
- you don't qualify for PLUS loans – for example, you're an independent undergraduate.
Banks and financial institutions often have the same tests as the federal government when deciding whether and how much to lend to students or parents. But when you apply for a private student loan, you will have a credit check.
If you don't have a strong credit profile, you can apply with a loan co-signer who has good credit, if you can. This may improve your chances of getting a loan, and at a lower interest rate.
Bear in mind that loans from US financial institutions are in US dollars, while you need to pay your fees in New Zealand dollars. When you're thinking about how much to borrow, consider the currency exchange rate.
An example of a private lender is Sallie Mae Student Loans.
Contact us for help
Email if you have any questions.
Amy Odom
Office location Student Registry Building, Room 1.38
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