Financial aid and student loan issues consistently generate complex questions for colleges and universities, particularly in light of the changes brought about by the One Big Beautiful Bill Act (OBBBA) and the rising cost of college. As the fall semester approaches, colleges and universities should expect more inquiries about aid packaging, eligibility, verification, professional judgment, satisfactory academic progress, and the information students receive about loan options. These questions are not only operational; they can raise significant legal and compliance concerns if your institution’s financial aid processes are unclear or inconsistent with current federal guidance.

The financial aid landscape has changed substantially for the upcoming academic year, particularly for newly enrolled students. Effective July 1, 2026, the OBBBA introduced changes to federal student aid programs, including the elimination of Graduate PLUS loans for new borrowers, new annual and lifetime aggregate borrowing limits, changes to Pell Grant eligibility for students whose scholarship or waiver aid covers their full cost of attendance, and the introduction of new federal student loan repayment options. Exceptions exist for some continuously enrolled students, but institutions should carefully review student eligibility for such exceptions and package their financial aid awards accordingly. Institutions should ensure that their financial aid staff are fully current on these changes, that student-facing communications have been updated accordingly, and that staff are prepared to handle the increased volume of questions from families and regularly updated Federal Student Aid (FSA) guidance. Looking for a step-by-step guide to OBBBA changes? Check back for an August blog post on this topic.

Aside from regulatory changes, here are actionable steps for your legal counsel and financial aid staff to work on this summer.

Clear and accurate messaging. Students often experience financial aid information as fragmented, especially when institutional communications, federal requirements, website language, and counseling materials do not align—or change quickly with the issuance of new FSA guidance. Institutions should review whether their financial aid notices and related communications present information in a way that is compliant and understandable. Legal risk increases when students interpret statements as guarantees, rely on incomplete explanations, or later claim that key financial consequences were not adequately disclosed. Institutions should also be aware that the Department of Education has resumed adjudicating borrower defense to repayment claims. This makes accurate, well-documented financial aid communications a matter of long-term institutional financial exposure, not only current compliance.

Clarify and ensure consistency in the handling of individualized aid questions and exceptions. Requests related to special circumstances, dependency issues, unexpected family hardship, and academic disruptions can require difficult judgment calls. Financial aid offices should be confident that staff understand which decisions are discretionary, which are governed by specific regulatory requirements, and how those decisions are documented. If similar cases are handled differently without a clear basis, institutions may invite challenges from students and families or trigger concerns about fairness and process integrity.

Interaction of financial aid with other campus functions. Summer is also a good time to consider how financial aid operations intersect with other campus functions. Enrollment changes, leaves of absence, disciplinary restrictions, athletics participation, and disability-related issues may all affect financial aid in ways that students do not immediately anticipate. Institutions benefit when financial aid teams are coordinated with the registrar, student affairs, and academic personnel so that students receive timely and accurate information before problems escalate. At a time when federal student aid eligibility is changing quickly, this is especially important.

Asking the right questions now can help institutions enter the fall with stronger processes and cleaner communication. In an area where financial stress, legal complexity, and changing federal rules often overlap, a careful summer review can reduce misunderstandings and support more consistent, compliant decision-making for students and staff alike.

Hunton’s higher education team regularly advises institutions on federal financial aid compliance, OBBBA compliance, borrower defense to repayment cases, and related legal requirements. If you would like to discuss how we can assist, please contact Gerry Leone, Amy Fabiano, or Brigid Harrington.