Money Matters - College Loans

Millions of students across the country are eagerly checking their mailboxes for acceptance letters from colleges and universities. However, there’s a black cloud hanging over this joyous time, as many students are panicking if they can afford their dream college or career with the new loan limitations going into effect this summer.

I had a chance to learn more in this interview with loan expert Jack Wallace, director of Yrefy.

What are the new loan limitations going into effect? 

 The “One Big Beautiful Bill” aka “OB3” made changes to the Federal student loan Graduate (Grad) PLUS, and Parent PLUS loan programs effective July 1, 2026, unless a borrower is grandfathered, i.e. a student is enrolled in college or university before July 1, 2026, and a Grad PLUS or Parent PLUS loan had been taken out previously. The Grad PLUS loan program is being eliminated effective July 1, 2026, unless you were already enrolled and a borrower. The PLUS loan program is going to have new loan limits effective July 1, 2026, unless you have already taken out a loan. The new graduate student loan limits are up to $20,500 annually with a lifetime cap of $100,000 for regular master’s programs. Programs deemed to be Professional programs, i.e., Law or Medical, have an annual cap of $50,000 with a lifetime cap of $200,000.

What impact might this have on students? 

 Given the high cost of getting a college or graduate degree these days, students and their families are going to have to become better ‘educated consumers’ when it comes to picking a college or university and how they are going to pay for it prior to submitting applications and getting the financial aid award letters upon acceptance to the college or university. Better to have these conversations before you go shopping for a college or university rather than after the student has been accepted. Families may want to consider applying to schools that the student can get into AND the family can afford! This may include a combination of private four-year schools, state four-year schools, and/or community colleges.

What resources do families have if their current financial situation falls short of tuition? 

 Always fill out the Free Application for Federal Financial Aid (“FAFSA”) form as soon as the student begins their senior year. Go to www.studentaid.gov. Approximately 86% of people who fill out the form (student and parent/guardian) get some form of financial aid including, but not limited to, a Federal Pell Grant. The new Federal student loan limits may require students and their families to secure credit based Private student loans to finance the unmet need that grants, scholarships, and Federal student loans do not cover. These loans are based upon the borrowers’ credit score including debt to income levels and payment histories. Contact your bank to see if they offer Private student loans or if they can refer you to a financial institution that does. Remember, go online, and begin looking for grants and scholarships when the student is in their junior year of high school. Good luck!