New Federal Loan Rules Cause Summer Disbursement Delays
Students faced severe financial hardship over the summer as new federal student loan rules, enacted July 1, caused widespread delays in aid disbursements.
Mikiah Roberson, a graduate student at the University of Maryland Global Campus, waited over a month for a $6,700 federal student loan disbursement she expected in early June. The delay, caused by new federal rules that took effect on July 1, left her struggling to pay rent and car payments, compounding stress during her summer semester.
Delayed disbursements impacted many students during the summer session. Experts worry the problems could persist into the fall semester, potentially affecting the nearly 60 percent of students who already experience housing or food insecurity. When loan money is held up, students have no recourse and must find ways to cover budget gaps of thousands of dollars.
"It had a major impact on my mental and emotional health," Roberson said. "Just constantly stressing out whether an eviction notice would be coming."
Blame Placed on Compressed Timeline
Advocates and financial aid administrators blame the delays on Congress's atypical planning. The One Big Beautiful Bill Act, signed by President Donald Trump on July 4, 2025, required major changes to take effect on July 1, 2026. This gave the Department of Education less than a year to issue full guidance on new regulations, leaving colleges scrambling to adapt their systems.
Ellen Keast, a spokesperson for the Department of Education, stated the department worked within the deadlines set by Congress. "Congress gave the Department less than a year to implement these changes," Keast said, noting the agency released final rules in May to provide time for schools to prepare.
In contrast, Tim Walberg, chairman of the House Committee on Education and Workforce, praised the legislation for overhauling a "broken system" and said delaying reforms would have negative consequences.
The Ripple Effect on Students
The delays create a cascade of financial problems. One graduate student in National University's marriage and family therapy program, who requested anonymity, expected a $5,000 disbursement around June 1 to cover rent. She did not receive the funds until mid-July, forcing her to borrow from family and pay $100 in late fees for both June and July.
Aissa Canchola Bañez, policy director at the nonprofit Protect Borrowers, said delayed disbursements are "incredibly significant for whether a student is able to remain enrolled and remain housed and cover their own basic needs."
The new law includes several provisions reshaping federal student aid:
These changes are expected to impact a significant number of the roughly 13 million students who rely on federal aid annually.
A Broken Implementation Process
The Higher Education Act establishes a "master calendar" requiring the Department of Education to start rulemaking a year and a half before an academic year begins, with a final rule due the preceding November. The One Big Beautiful Bill Act's July 2025 signing and July 1, 2026, effective date made following this timeline impossible.
Sarah Austin, a policy analyst at the National Association of Student Financial Aid Administrators (NASFAA), explained colleges normally use the months between November and the next academic year to understand new rules and update software. "What we've seen here is a condensed version of that," Austin said, noting some major software vendors still weren't caught up as of August.
NASFAA and over 40 other higher education organizations had called for a delay until July 1, 2027. Kenneth Ferreira, then-president of the Eastern Association of Student Financial Aid Administrators, called the situation a "fundamental breakdown in the infrastructure that supports federal student aid delivery."
Confusion and Last-Minute Guidance
Institutions say the federal government has been slow to issue guidance, with some details still unclear. Formal guidance on prorating loans for part-time students, for instance, was only released in early August, just weeks before many classes began. Some guidance has also been conflicting, according to NASFAA, prompting a group of 16 Congressional Democrats to send a letter on August 20 calling for additional clarifications.
Mark Kantrowitz, a student loan expert, said, "the reason why we have a master calendar provision is it is difficult for colleges to adapt to new regulations when there's not enough time."
Ellen Keast of the Education Department countered that the final rule should not have been a surprise, as consensus on proposed rules was reached the previous November. "If institutions waited until the final rule was issued to start preparing, that was their decision," she said, pointing to available webinars and published resources.
