<\/p>\n
Starting July 1, 2026, sweeping changes to federal student loan rules will reshape how Americans pay for higher education, particularly for graduate students, professional students and parents.<\/p>\n
The changes, enacted under last year\u2019s legislation, introduce borrowing caps where none existed before and significantly narrow repayment options, Becca Craig, a wealth advisor with Focus Partners Wealth, said in a recent interview.\u00a0<\/p>\n
For many households, the result will be a more complex and potentially more expensive path to financing college.<\/p>\n
For years, borrowers could rely on federal programs such as Grad PLUS and Parent PLUS loans to cover the full cost of attendance. That flexibility is now disappearing, Craig said.<\/p>\n
Instead, borrowers will face strict limits.<\/p>\n
Below is a transcript of the interview with Craig, edited for brevity and clarity.<\/p>\n
Student loan rules are changing: what borrowers need to know now<\/p>\n
Robert Powell: For generations, higher education has been sold as one of the clearest paths to the American dream. But starting this summer, that path may be harder to navigate. Here to talk about that is Becca Craig, a financial adviser at Focus Partners Wealth. Becca, welcome.<\/p>\n
Becca Craig: Thanks so much for having me, Bob.<\/p>\n
A shifting landscape for college funding<\/p>\n
Powell: So things are about to get harder for folks?<\/p>\n
Craig: I\u2019d say things are going to get different. For generations, the idea of the American dream has been supported by going to college or another higher education institution. But starting this summer, because of changes enacted in last year\u2019s \u201cOne Big Beautiful Bill\u201d Act, that path will be different to navigate and potentially harder.<\/p>\n
Tuition costs continue to rise, loan rules are changing, and some borrowing options that students once relied on are going away. The playbook for funding higher education is changing.<\/p>\n
The flexibility of federal programs such as Grad PLUS and Parent PLUS is now disappearing.<\/p>\n
Latorre/Unsplash<\/p>\n
New federal loan limits begin July 2026<\/p>\n
Powell: Where should families begin with these changes?<\/p>\n
Craig: The biggest shift starts July 1, 2026. Federal student loan lending rules will change most significantly for graduate students, professional students and parents.<\/p>\n
Graduate and professional students, along with parents using Parent PLUS loans, will face tighter caps and fewer repayment options.<\/p>\n
Caps replace previously unlimited borrowing<\/p>\n
Powell: What do those caps look like?<\/p>\n
Craig: Previously, borrowers could use Grad PLUS loans to cover up to the full cost of attendance. That\u2019s effectively going away for new borrowers.<\/p>\n
Students will now need to cover funding gaps through work, scholarships, savings or other resources. The new annual caps are:<\/p>\n
Graduate students: $20,500Professional students: $50,000<\/p>\n
Professional students include those pursuing fields such as medicine or law.<\/p>\n
Parent PLUS loans now capped<\/p>\n
Powell: What about Parent PLUS loans?<\/p>\n
Craig: Those are changing significantly as well. Previously, parents could borrow up to the full cost of attendance minus aid.<\/p>\n
Now there will be:<\/p>\n
An annual cap of $20,000A lifetime cap of $65,000 per studentUndergraduate borrowing largely unchanged<\/p>\n
Powell: What about undergraduate students?<\/p>\n
Craig: There are no major changes at the undergraduate level. Existing annual and aggregate limits for subsidized and unsubsidized loans remain in place. The biggest impact is on graduate and professional education.<\/p>\n
Implications for Public Service Loan Forgiveness<\/p>\n
Powell: How do these changes affect Public Service Loan Forgiveness?<\/p>\n
Craig: The program itself isn\u2019t changing directly. But lending limits could reduce how much borrowers can have forgiven.<\/p>\n
Many students may need to rely more on private loans, which are not eligible for forgiveness. That could significantly affect those pursuing careers in public service.<\/p>\n
Fewer repayment options going forward<\/p>\n
Powell: What\u2019s happening with repayment plans?<\/p>\n
Craig: The landscape is tightening. Previously, borrowers had nearly a dozen repayment options. For new loans after July 1, that narrows to two:<\/p>\n
Standard repaymentA new income-driven plan called RAP<\/p>\n
Repayment terms will depend on the amount borrowed:<\/p>\n
Under $25,000: 10 years$25,000 to $50,000: 15 years$50,000 to $100,000: 20 yearsMore than $100,000: 25 years<\/p>\n
Longer repayment terms may reduce monthly payments but extend debt burdens significantly.<\/p>\n
Planning strategies for families<\/p>\n
Powell: So what should families do?<\/p>\n
Craig: First, work closely with your school\u2019s financial aid office to maximize scholarships, grants and work-study opportunities.<\/p>\n
Beyond that, families can consider:<\/p>\n
529 college savings plansRoth IRAsTaxable investment accounts<\/p>\n
529 plans offer tax-deferred growth and tax-free withdrawals for qualified expenses. Some unused funds may even be rolled into a Roth IRA, subject to eligibility rules.<\/p>\n
A broader financial planning issue<\/p>\n
Craig: Education funding should not be viewed in isolation. It needs to be part of a broader financial plan because it affects cash flow, taxes, and long-term goals.<\/p>\n
This is especially important for families nearing retirement or considering wealth transfer strategies.<\/p>\n
The value of professional advice<\/p>\n
Powell: Should families seek professional help?<\/p>\n
Craig: Yes. Working with fiduciary advisers can help navigate savings, borrowing, and repayment strategies.<\/p>\n
Credentials to look for include:<\/p>\n
Certified Financial Planner (CFP\u00ae)Certified Student Loan Planner (CSLP\u00ae)Certified College Financial Consultant (CCFC)<\/p>\n
Each brings specialized expertise to different parts of the planning process.<\/p>\n
Final thoughts on student loans <\/p>\n
Craig: Don\u2019t panic. Stay calm and plan thoughtfully.<\/p>\n
Education remains a valuable investment, whether through traditional college or vocational programs. The key is choosing the right funding and repayment strategy.<\/p>\n
Related: Wellness retailer files Chapter 11 bankruptcy amid rising debt<\/p>\n
#families #student #loan<\/p>\n","protected":false},"excerpt":{"rendered":"
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