What the Cap on Parent Plus Loans Means to You and How to Support Your Student Getting to and Through College

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As a parent, you want to give your child the best chance at success, and often that means helping them pay for a college education. For years, the Federal Parent PLUS Loan program offered a way for parents to borrow up to their student’s full cost of attendance, or other financial aid, filling the gap where savings, grants, and other loans fell short. However, a major shift in federal policy is changing the landscape.

Starting July 1, 2026, new rules will place stricter limits on how much you can borrow. Understanding these changes — and planning ahead — can make a big difference in how your family finances college and supports your student from application to graduation.

The New Parent PLUS Loan Limits

For parents of undergraduate students who take out new loans starting with the 2026-2027 academic year, the previous unlimited borrowing option will be replaced with hard caps.

  • Annual Limit: A cap of $20,000 per student, per year.
  • Aggregate Lifetime Limit: A total cap of $65,000 per student.

The new limits create a dramatic departure from the previous borrowing structure. For context, the average cost of college in the US currently exceeds $38,000 per year, meaning the new federal loan limits will not cover the full cost for many families.

Who Is Affected?

  • New Borrowers: Parents taking out their first Parent PLUS Loan for a student beginning a new program on or after July 1, 2026, will be subject to these new limits.
  • Current Borrowers: If you already have Parent PLUS Loans disbursed before July 1, 2026, you can continue borrowing under the previous rules for up to three more academic years or until your child finishes their program, whichever comes first.

Repayment Plan Restrictions

The changes also affect your future repayment options. New Federal Parent PLUS Loans taken out after July 1, 2026, will not qualify for the popular income-driven repayment (IDR) plans, including the new Repayment Assistance Plan (RAP). Repayment will be limited to the Standard Repayment Plan, which may result in higher fixed monthly payments.

Why This Matters For Families

  • Less Borrowing Flexibility for Parents: If your student will start college in 2026 or later, you’ll face a $20,000-a-year cap for what you can borrow for them through Parent PLUS — regardless of how high the institution’s cost of attendance may be. That means if tuition plus living expenses are much higher than $20,000 a year, you’ll need to fill the gap with other sources (savings, scholarships, student borrowing, private loans) rather than relying purely on Parent PLUS.
  • Planning Timelines Matter: Because the caps take effect July 1, 2026, timing is critical. If your student begins college or a new program at that time or later, you’ll be tied to the new limits. That means if you have a high-cost institution in mind for your student, you’ll want to plan accordingly. For example, applying to colleges with lower costs, securing more scholarships, or saving more aggressively. 
  • It Shifts Risk and Responsibility Toward Students: With parents capped, students may need to borrow more in their own name (if eligible), work part-time, accelerate savings, or consider less costly institutions. It also reinforces the importance of exploring the total cost of attendance — including hidden expenses such as transportation, books, and living costs.
  • Even With Caps, Debt Still Matters: According to data, out of roughly 3.8 million Parent PLUS borrowers, the outstanding debt is approximately $112.2 billion. Together, the figures highlight the heavy burdens many families carry and the need for reforms that limit exposure.

Strategies to Support Your Student Financially

With federal aid becoming more restrictive, you need to actively plan to cover the costs of college. Starting early and employing a variety of strategies will help your student get to and through college without excessive debt.

Sit down together and estimate the total cost of attendance for each year: tuition, fees, housing, meals, books, transportation, and personal expenses. Also, account for expected increases each year. Then ask: 

  • How much can our family contribute (savings, parent income, gifts)? 
  • How much will your student contribute (work-study, summer job, internships)? 
  • What scholarships and grants can we explore? 

Armed with this number, you can compare it to the $20,000 annual cap and see whether the Parent PLUS loan covers the gap — and if not, where the difference will come from.

Maximize Free Financial Aid

  • Complete the FAFSA Early: Your student should fill out the Free Application for Federal Student Aid (FAFSA) as soon as it becomes available each year. Think of the FAFSA as your gateway to federal grants, work-study opportunities, and federal loans.
  • Prioritize Grants and Scholarships: These are forms of gift aid that do not require repayment. Your student should aggressively and continuously apply for scholarships — national, state, local, and institutional — throughout high school and college. Resources like Career OneStop’s scholarship Finder (sponsored by the U.S. Department of Labor) and Federal Student Aid can help you start.
  • Appeal Your Financial Aid Offer: If your family’s financial circumstances have changed or you believe the aid package does not adequately reflect your needs, you have the right to appeal to the college’s financial aid office.

Strategic College Savings and Spending

  • Use 529 Plans: Continue to contribute to and utilize any existing 529 college savings plans. Funds from these accounts grow tax-free and can be withdrawn tax-free for qualified education expenses.
  • Work-Study and Part-Time Jobs: Encourage your student to explore federal work-study programs or a part-time job. Working helps cover immediate expenses and develop professional skills, but make sure they balance work hours with academic success.
  • Explore Cost-Saving Alternatives: Consider less expensive options, such as starting at a community college before transferring to a four-year university, or choosing an in-state public university over a more expensive private institution.

Consider Other Loan Options Carefully

If a funding gap remains after exhausting all federal options, you may need to look at alternatives. Proceed with extreme caution and fully understand the terms.

  • Private Student Loans: These are credit-based, and most students will require a co-signer. Interest rates and repayment terms can be less favorable than federal loans, and they typically lack the consumer protections and flexible repayment options that federal loans offer.
  • Home Equity: Some parents find that a Home Equity Line of Credit (HELOC) or a cash-out refinance offers a lower interest rate than the current Parent PLUS Loan rate of 8.94% for the 2025–2026 academic year, as reported by Sallie Mae. Consult a tax and financial adviser, as this option uses your home as collateral.

Key Take-Away

The cap on Parent PLUS loans doesn’t mean college is unaffordable. It does mean families need to plan more proactively, diversify funding sources, and engage students early in assumptions about cost, savings, student contributions, and borrowing.

UNCF: A Proven Pathway to College Success

UNCF awards more than $100 million in scholarships annually to over 10,000 students across more than 1,100 institutions nationwide. Over the last 75 years, UNCF has helped more than half a million students earn their college degrees.

We strongly encourage students to explore the 37 Historically Black Colleges and Universities (HBCUs) that UNCF directly supports.

Visit UNCF Opportunities to learn about UNCF scholarships, programs, Internships, and fellowships. UNCF’s website provides detailed instructions about applying for scholarships and grants, as well as other tips.

Start Planning Now

If your student will start college after July 2026, count on the cap being part of your strategy. Use these changes as motivation to map out a smarter, leaner path to graduation — and to keep student debt in check.

Borrowing money to support a student’s college journey is a generous and meaningful act — but as with all borrowing, the terms matter. Understanding the new $20,000-per-year, $65,000 lifetime cap on Parent PLUS loans gives you the power to make informed decisions, avoid last-minute surprises, and partner with your student on financial planning that supports both graduation and financial health.