FAFSA Updates: Frequently Asked Questions
The Free Application for Federal Student Aid, known as the FAFSA, serves as the gateway form used by the federal government, state agencies, and colleges to award financial assistance, including federal student loans, Pell Grants, and work-study funds. In 2026, there are important FAFSA changes, and every student should know about them.
FAFSA changes stem from two major federal laws: the FAFSA Simplification Act, which shortens and simplifies the application process, and Public Law 119-21, signed July 4, 2025, which enacted new borrowing limits and grant rules that took effect July 1, 2026.
FAFSA Updates: Frequently Asked Questions
These updates change financial options for undergraduates, graduate candidates, parents borrowing for dependent children, and trade school students. These changes do not affect the process of applying for or transferring benefits within the Post-9/11 GI Bill program, but they may affect how you apply and pay for some student aid.
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What changed on the actual FAFSA application?
The Department of Education simplified the application, reducing the questionnaire from more than 100 items to about 36 questions. The system uses the Direct Data Exchange to retrieve federal income tax information directly from the Internal Revenue Service.
Every contributor to the application, including students, spouses, biological parents, and stepparents, must set up their own Federal Student Aid account and grant consent for data retrieval. Missing consent from any contributor stops processing.
How did federal parent borrowing rules change?
Federal rules place hard dollar caps on Parent PLUS loans, which previously allowed parents to borrow up to the total cost of attendance minus other aid.
Starting July 1, 2026, parents may borrow no more than $20,000 per student each year. Lifetime Parent PLUS borrowing stops at $65,000 per student. These caps apply per student, meaning two parents sharing borrowing responsibilities cannot exceed the combined limits.
Parents with active loans disbursed before July 1, 2026, retain prior borrowing rules under a legacy provision for up to three years, provided the student remains continuously enrolled in the same program.
Which family assets are excluded from the financial aid formula?
The calculation replaces the Expected Family Contribution with the Student Aid Index, which changes how some small business and self-employed families fill out the forms.
Under this metric, families no longer count the net worth of family farms where the family resides, family fishing businesses, or family-owned small businesses employing 100 or fewer people. Excluding these holdings lowers the assessed asset baseline for self-employed households and improves eligibility for need-based aid.
>> Are you looking for VA-approved degree and certificate programs? Try the College Recon School Finder tool.
What happens to graduate and professional student loans?
Grad PLUS loans were discontinued for new borrowers entering programs on or after July 1, 2026.
Graduate students can access Direct Unsubsidized Loans up to $20,500 annually, with a lifetime aggregate cap of $100,000. Students enrolled in designated professional programs, such as law or medicine, may borrow up to $50,000 annually, with a program aggregate cap of $200,000.
A separate lifetime maximum of $257,500 now applies to all combined undergraduate and graduate federal loans. Borrowers cannot exceed this ceiling even after paying down loan balances.
Are Pell Grants affected?
The minimum Pell Grant award is 10% of the maximum award amount for the award year and Pell Grant awards should be rounded to the nearest $5. For example, the Pell Grant minimum award amount for 2026–27 is $740. These numbers will change for future academic calendars.
Congress also expanded the program to include short-term career training courses lasting 8 to 15 weeks, allowing trade students to access grant funds previously restricted to degree-granting pathways.
What repayment options exist under the new rules?
The Department of Education phased out older income-driven plans and instituted two frameworks: the Tiered Standard Plan and the Repayment Assistance Plan (RAP). RAP sets monthly payments between 1% and 10% of adjusted gross income, eliminates negative interest accumulation, and forgives remaining balances after 30 years.
Parent PLUS borrowers may repay only through the Tiered Standard Plan, which sets fixed terms between 10 and 30 years based on the total principal balance.
When must students submit their paperwork?
The federal deadline for the 2026–2027 award year is June 30, 2027. State grant organizations and campus financial aid offices set earlier deadlines to allocate limited pools of need-based funding.
>> Are you looking for VA-approved degree and certificate programs? Try the College Recon School Finder tool.
About the author
Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter/editor for Air Force Television News and the Pentagon Channel. His freelance work includes contract work for Motorola, VALoans.com, and Credit Karma. He is co-founder of Dim Art House in Springfield, Illinois, and spends his non-writing time as an abstract painter, independent publisher, and occasional filmmaker.
