Parent PLUS Loan Caps Take Effect July 1, Forcing Families to Rethink College Costs

New federal caps on Parent PLUS loans take effect July 1, 2026, limiting the amount parents can borrow annually to cover their children's college costs and forcing many families to rethink how they will pay for higher education.

Parent PLUS loans have long allowed parents to borrow up to the full cost of attendance at any college, with no cap tied to income or the family's ability to repay. The new rules set annual and aggregate borrowing limits for the first time, which financial advisors say will leave some families with a significant funding gap.

Families who planned to rely heavily on Parent PLUS loans to cover tuition, room, and board at expensive private colleges will need to find alternative sources of funding, including private loans, savings, or choosing less expensive schools.

Financial planners are urging families to review their college funding plans before the July 1 deadline. Options include increasing contributions to 529 college savings accounts, applying for additional institutional aid, or having students take on more of the borrowing through federal student loans in their own names.

The caps are part of a broader set of changes to federal student aid that took effect in 2026, including new restrictions on income-driven repayment plans and changes to how financial need is calculated under the FAFSA.

Experts said the changes reflect growing concern in Washington about the total amount of federal student loan debt, which now exceeds $1.7 trillion. Critics of the caps argue they will disproportionately affect middle-income families who earn too much to qualify for grants but too little to pay for college out of pocket.