Warn parents: The Big Beautiful Bill impacts your PLUS loan borrowing and repayment terms directly
As of July 1, 2026, changes to Parent PLUS Loans aim to protect parents from excessive debt and reduce financial risk associated with these loans. These changes include lower borrowing limits and the removal of certain repayment benefits [1][2][4].
New Borrowing Limits
Starting July 1, 2026, Parent PLUS Loans will be capped at $20,000 per year, with a $65,000 lifetime maximum per student [1][2]. This replaces the previous unlimited borrowing capacity.
Limited Repayment Options
New Parent PLUS loans will no longer be eligible for income-driven repayment (IDR) plans or forgiveness programs like Public Service Loan Forgiveness (PSLF). They will only qualify for the standard repayment plan [4].
Rationale Behind the Changes
The rationale behind these changes is to limit borrowing to protect parents from excessive debt and reduce the financial risk associated with these loans [1][5]. By lowering borrowing limits and restricting repayment benefits, Congress intends to make Parent PLUS Loans less attractive and encourage families to seek alternative funding strategies or shift more responsibility for borrowing to students themselves [5].
Implications for Parents and Students
These changes may impact families who rely heavily on Parent PLUS Loans for their children's education. For example, if you are borrowing $20,000 per year for a four-year degree, you would only have $5,000 left for the senior year [3]. Additionally, the new loan limits no longer allow parents and grandparents to borrow up to the child's school-certified cost of attendance, minus other received aid [2].
Alternative Funding Strategies
When considering college financing, it's essential to explore alternative funding strategies before relying on loans. Some options include completing the FAFSA, applying for private scholarships, selecting lower-cost educational programs, negotiating financial aid packages with schools, and exhausting every other avenue before relying on loans [6]. Loans, both Parent PLUS and private parent loans, should be a last resort [7].
In conclusion, the policy shifts reflect a strategic effort to reduce the risk of parental over-borrowing and protect parents from becoming overburdened financially by their children's educational costs while simultaneously controlling federal loan exposure [1][5]. It is crucial for families to be aware of these changes and plan accordingly to secure the best financial future for both parents and students.
References
- Federal Student Aid
- Consumer Finance Protection Bureau
- NerdWallet
- Student Loan Hero
- CNN
- The College Board
- U.S. Department of Education
- As the changes in Parent PLUS Loans approach on July 1, 2026, students and parents must reconsider their education-and-self-development finances, as the new policy aims to restrict excessive borrowing to minimize risks.
- With the arrival of the new limitations on Parent PLUS Loans, it is essential for students to explore alternative business strategies for finance, such as completing FAFSA, applying for private scholarships, or negotiating financial aid, to minimize the need for loans in their education-and-self-development journey.
