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Understanding Direct Loan Regulation

This page details changes to direct loan regulation effective July 1, 2026. 

Professional Degree Programs

On June 29, 2026, the U.S. Department of Education published an updated list of programs that are considered "professional degree" programs for purposes of federal Direct Loan annual and aggregate borrowing limits. This action was taken in response to a federal court order, and the Department has indicated that the designations are temporary and may change as ongoing litigation proceeds. Given the uncertainty surrounding these changes, King’s College is not currently originating federal Direct Loans based on the newly designated professional degree classifications. We are taking a cautious approach to ensure compliance while the regulatory and legal landscape continues to evolve.

We understand that this uncertainty may be frustrating for students and academic departments. Our Financial Aid Office is reviewing developments as they occur and will provide updates as additional federal guidance becomes available.

Schedule of Reductions

What is the Schedule of Reductions (SOR)?

The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, introduced major changes to federal student aid programs. Several provisions affecting Federal Direct Student loans became effective July 1, 2026. Among the most significant changes is the introduction of the Schedule of Reductions (SOR), which requires federal student loan eligibility to be reduced based on enrollment level.

Beginning with the 2026 fall term, annual federal student loan amounts will be reduced based on enrollment. Full-time undergraduate students (12 or more credits) will receive a full loan amount, but part-time undergraduate students (6-11 credits) will receive a proportional total loan amount. Undergraduate students must enroll at least half-time to be eligible for federal direct loans.

Full-time graduate students (6 or more credits) will receive a full loan amount, but part-time graduate students (3-5 credits) will receive a proportional total loan amount. Graduate students must enroll at least half-time to be eligible for federal direct loans.

Schedule of Reduction (SOR) requirements apply to all Subsidized and Unsubsidized Federal Direct loans and Graduate PLUS loans offered under legacy provisions. Students must still be enrolled at least half-time to receive a federal direct loan.

The Calculation Formula


To determine the adjusted loan amount, use the following formula:

Reduced Limit Percentage = (Credit Hours Enrolled in Academic Year) (Full time Credit Hours for Academic Year) × 100
Adjusted Loan Amount = Maximum Full time Loan Eligibility × Reduced Limit Percentage

Student Loan Disbursements

Students will initially be awarded with an expectation of full-time enrollment. King’s College will monitor enrollment during the add/drop period at the start of each semester. At the conclusion of the add/drop period, a student’s total eligible credits will be evaluated, and the loan amount will be adjusted based on actual enrollment.

For example, if enrolled in 12 credits, the student will receive 100% of the expected loan. However, if enrolled in 9 credits, the student will receive a lesser amount. The amount will vary based on the individual student’s eligibility.

Federal Direct Loans will not be disbursed until after the add/drop period is over and the Office of Financial Aid has had additional time to review and update student loan amounts to match the enrollment level.

Changes to enrollment

The impact of dropping courses or withdrawing from courses will be considered when calculating loan eligibility. It is strongly advised that students discuss impacts of withdrawing or dropping a course with the Office of Financial Aid.

Adding courses after the add/drop period will not result in an increase in loan amount in the same term. Adjustments to increase credits will be made, if necessary, in the next term.

Please note that academic advisors cannot determine or calculate potential federal student loan adjustments. Students are strongly advised to consult the Office of Financial Aid for accurate and individualized loan disbursement information.

SOR Calculation Examples

Example 1 - Same fall and spring enrollment

Leo is a freshmen student eligible for $3,500 of subsidized loan.

Leo will be enrolled in 12 credits for the fall semester and estimated 12 credits for the spring semester. A total of 24 credits. Since full-time undergraduate enrollment at King’s College is defined as 24 credits in an academic year, Leo will receive the full amount of his $3,500 subsidized loan.

Example 2 - Different fall and spring enrollment

Leo is a junior eligible for $5,500 of subsidized loan.

Leo is enrolled in 9 credits for the fall semester and estimated 12 credits for the spring semester. A total of 21 credits.

  • Step 1: Determine maximum loan amount: $5,500
  • Step 2: SOR Percentage:
    • A) 21/24 = .875 or 88%
    • B) 88% x 5,500 = $4,840 maximum loan for year
  • Step 3: Equal Disbursements: fall at 9 credits = $2,420, spring at 12 credits = $2,420
  • King’s College divides loan disbursements equally across terms.

Example 3 - Withdrawing from a course during fall term

Leo is a sophomore eligible for $4,500 of subsidized loan.

Leo is enrolled in 12 credits for the fall semester and estimated 12 credits for the spring semester. A total of 24 credits.

Leo withdrew from 6 credits during the fall semester on October 28, two days before the last day for authorized course withdrawal.

Leo’s fall enrollment with the withdrawn courses is now considered to be 6 credits, not 12. Since Leo was enrolled in 12 credits at the time his fall loan was disbursed, he was overpaid in the fall. Leo’s enrollment is now 6 credits fall + 12 credits spring = 18 credits total. The difference must be made with the spring loan disbursement.

  • Step 1: Determine maximum loan amount: $4,500
  • Step 2: SOR percentage:
    • A) 18/24 = .75 or 75%
    • B) 75% x $4,500 = $3,375
    • C) $3,375 is adjusted annual loan maximum
  • Payment adjustments: Since Leo was at 12 credits at the time his fall semester loan was disbursed, ($2,250), the adjustment must be made with his spring loan disbursement.
  • Step 3: Adjust spring semester loan disbursement: $3,375 is adjusted annual loan maximum. $2,250 was disbursed in the fall semester. $3,375 - $2,250 = $1,125 adjusted amount of spring loan disbursement
  • Verify loan disbursements equal new loan: maximum $2,250 + $1,125 = $3,375

Example 4 – Graduate student different fall and spring enrollment

Leo is a graduate student eligible for $20,500 of unsubsidized loan.

Graduate students are considered full-time when enrolled in 6 credits per semester and 12 credits per academic year.

Leo is enrolled in 3 credits for the fall semester and estimated 6 credits for the spring semester. A total of 9 credits.

  • Step 1: Determine maximum loan amount: $20,500
  • Step 2: SOR Percentage:
    • A) 9/12 = .75 or 75%
    • B) 75% x 20,500 = $15,375 maximum loan for year
  • Step 3: Equal Disbursements: fall at 3 credits = $7,687, spring at 9 credits = $7,688
  • King’s College divides loan disbursements equally across terms.

2026 Limits and Changes to PLUS Loans

  • Effective July 1, 2026, Federal Direct Parent PLUS loans will be capped at $20,000 per student per year, with a $65,000 lifetime limit per dependent student.
  • Existing Parent PLUS borrowers who have borrowed for their students before July 1, 2026, can continue with the current limits for 3 more years or until the student’s program ends
  • The Federal Direct Graduate PLUS loan program will be discontinued beginning on July 1, 2026. This program will not be available to new borrowers. Federal Direct Graduate PLUS loans will remain available to current students who have borrowed a Federal Direct Loan prior to July 1, 2026, while enrolled in a program of study. The Graduate PLUS loan program will be available for three academic years or the remainder of the expected time to earn their credential, whichever is less. Students must remain in the same program at the same institution to qualify for this legacy provision.

2026 Changes to Repayment and Student Loan Forgiveness

  • Public Service Loan Forgiveness (PSLF)
    • New limitations on eligibility have been proposed as part of regulatory action.
  • New Repayment Plans
    • For new loans disbursed after July 1, 2026, the bill eliminates current income-driven repayment plans (IBR, PAYE, SAVE) and replaces them with a new Repayment Assistance Program (RAP).
    • Students who have borrowed loans before July 1, 2026, and will borrow a new loan after July 1, 2026, are limited to the new RAP or the standard repayment plans for the new loan.
    • RAP borrowers will not be locked into a 30-year plan. They can switch to a standard plan, which ranges from 10 to 25 years.
    • Borrowers with no new loans made on or after July 1, 2026, are eligible to enroll in the current income-based repayment plan (IBR), graduated, and extended repayment plans, and can also opt into the new RAP. Current borrowers enrolled in ICR, PAYE, or SAVE plans must transition to a new repayment plan by July 1, 2028. If no selection is made by that date, they will be moved into RAP.
    • More information on RAP is forthcoming from the federal government.