Financial Aid Updates and Changes

One Big Beautiful Bill Act (OBBBA)

What is OBBBA?

The One Big Beautiful Bill Act, sometimes referred to as OBBBA or OB3, was signed into law on July 4, 2025 and includes many changes to the Higher Education Act of 1965 (HEA). These changes affect several key aspects of federal financial aid programs, especially the Pell Grant and Direct Loans.

Below are some of the key changes that will affect students at Shasta College. Although the list is not exhaustive, we have tried to share those most relevant to our students.

How does OBBBA affect the FAFSA application?

  • Financial assets that are counted when students and parents fill out the 2026–27 FAFSA will now better reflect a family’s financial need. This includes forms submitted during the FAFSA beta events that began Aug. 5, 2025.
  • OBBBA includes exclusions for small businesses, family farms, and commercial fishing businesses.

Pell Grant Changes

  • Cost of Attendance and Pell: Students receiving non-federal aid (state grants, institutional grants, and scholarships) that is equal to or greater than the student’s Cost of Attendance are not eligible to receive Pell, even if their SAI makes them Pell eligible. In this situation, the school must either reduce the non-federal aid or return the Pell Grant and cancel any future Pell disbursements.
  • SAI and Pell: Students with an SAI equal to or greater than twice the maximum Pell Grant amount are not eligible for a Pell Grant. Currently an SAI of 14,790 means no Pell eligibility.
  • Foreign Income and Pell: Foreign income will be included in Pell Grant determinations.

Direct Loan Changes

  • Annual Loan Limits: Colleges are allowed to, but not required to, set lower annual loan borrowing limits by program of study. Shasta College does not currently have a loan limit that is less than the federally allowed limits.
  • Limit on Loans due to Expected Time to Complete: Students will be able to take out student loans for the program length of their major. The “program length” is the amount of time it would take a full-time student to complete the course requirements. If the student has already made progress in completing the courses needed for their major, then that completed time reduces the time remaining for the student to borrow.

If a student completed any portion of their major prior to July 1, 2026, that time will be counted as “completed” and will be deducted from the program (major) length to determine the “expected time to credential (complete).

  • Schedule of Reductions: For all 2026-27 loans, colleges are required to reduce a student’s annual loan limit if the student is enrolled less than full-time. This reduction applies to all programs/majors measured in academic credits and applies to all students, even those “legacy” students who are exempt from the new aggregate borrowing limits.
  • Changes to Loan Repayment Options:
    • Borrowers that take out loans on or after July 1, 2026 will be limited to two repayment options:
      • Tiered standard repayment plan.
      • Income-driven repayment plan called the Repayment Assistance Plan (RAP).
    • Existing income-driven repayment plans will sunset in 2028.
    • Loan borrowers with no new loans after July 1, 2026 will still be able to stay on their current repayment plan as long as they do not take out a new loan.

FAFSA Identity Verification

Although not directly related to OBBBA, beginning April 26, 2026, the federal government added a new step to the Free Application for Federal Student Aid (FAFSA) process to protect students from identity fraud. From this date forward, random applications will be selected for an identity check.

Being selected for an identity check does not mean you did anything wrong on your application. The identity checks are only being added to improve security and reduce fraud.

How will the identity checks work?

If your application is selected, you will receive a request to verify your identity by completing a short (just a few minutes) live camera check on your phone or tablet from Federal Student Aid (FSA). Be prepared to show a valid government-issued ID. Most applications will not be selected for a check.

If you get a verification request, respond to it right away. Waiting can delay your financial aid. If you don’t have a phone or tablet with a camera, contact the Financial Aid Office to discuss options.

What should you do now?

If you have already submitted your 2026-2027 FAFSA, watch your email for any verification requests and respond promptly.

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