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 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 students (12 or more credits for undergraduates and 9 or more credits for graduates) will receive a full loan amount, but part-time students (6-11 credits for undergraduates and 5-8 credits for graduates) will receive a proportional total loan amount. Students must enroll at least half-time to be eligible for federal direct loans.

Student loan amount notifications

Students will initially be awarded with an expectation of full-time enrollment.

NAU will monitor enrollment and update student loan eligibility through the date of disbursement. Students should not expect immediate or ‘live’ updates to award packages based on changes made to their course schedule. It will take the financial aid office staff additional time to manually review and update the student loan amount to match the enrollment level.

Student loan disbursements

At time of loan disbursement, the loan amount will be 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 (75%). The amount will vary based on the individual student’s eligibility.

Changes to enrollment

The impact of dropping, failing to start, or withdrawing courses will be considered when calculating loan eligibility. It is strongly advised that students discuss impacts of withdrawing or dropping a course with the financial aid office.

If your enrollment drops below full-time after your fall loan has been disbursed, your spring federal loan amount may be reduced based on your enrollment level.

Adding courses after the first disbursement of a federal student loan will not result in an automatic increase in loan amount in the same term. Adjustments to increase loan amounts in the same term based on updated credits can be made upon request. Email financial.aid@nau.edu. 

It is strongly recommended to discuss course changes, when they affect the total number of credits, with an academic advisor or member of the financial aid office prior to making the change.

Frequently asked questions

What is the Schedule of Reduction (SOR)

SOR is a new rule introduced in the One Big Beautiful Bill Act that requires institutions to prorate annual loan amounts in direct proportion to the percent of full-time status the student is enrolled.

Which loans are affected by SOR?

Federal student loans are impacted by this policy: unsubsidized, subsidized and Graduate PLUS loans*

*Graduate PLUS loans are only available to qualifying legacy students.

What is considered full-time enrollment at NAU?

To be considered a full-time student, you must take the following number of credits:

• 12 or more credits for undergraduates
• 9 or more credits for graduates

What happens if I drop classes?

If you drop classes before the first disbursement of your loan, your amounts may be adjusted based on your actual enrollment. If you drop classes after the first disbursement of your loan, your spring federal student loan will be reduced.

After the first disbursement, can I add a course to increase my loan in the same term?

Yes, but this will not be done automatically. Students wanting an increase to their student loan will need to email financial.aid@nau.edu. The Office of Scholarships and Financial aid will review your loan eligibility and determine if an increase can be made. Requests for loan increases must be made by the deadline to accept student loans for the semester that the request is being made for.

Am I eligible for student loans if I am enrolled less than half-time?

No. Students must be enrolled at least half-time to borrow federal student loans. Half-time for undergraduates is 6 credits. Half-time for graduates is 5 credits.

Will the Pell Grant Pell (or other financial aid) be affected?

The Pell Grant is not directly affected by this new SOR rule.

Am I liable for charges on my LOUIE account that my aid, or adjusted aid, does not cover?

Yes. All charges in the LOUIE account are the student’s responsibility, regardless of whether they are receiving financial aid. It’s important to be aware of your charges, know when your aid will be disbursed, and whether you have enough aid to help pay your charges.