Among the many provisions in the One Big Beautiful Bill Act (signed into law July 4, 2025) are some headline-grabbing changes to federal education loans for parents and students, taking effect in 2026. Parent PLUS loans will see lower limits, some programs will disappear for both parents and graduate students, and certain repayment options are being tightened, or eliminated entirely.
For families navigating the ever-rising costs of college, these changes could mean a bigger puzzle to solve when it comes to financing your student’s education. At Truvium Wealth Management, we know how college costs ripple across every part of a family’s financial plan. But with thoughtful, forward-looking guidance, funding your children’s education is still achievable without derailing your other financial goals.
Let’s break down exactly what these changes mean for federal education loans, Parent PLUS, and your family’s college planning strategy.
Lower Limits to Parent PLUS Loans and No PLUS for Grads
In the past, the Parent PLUS program was a college planning lifesaver for parents with college-bound undergrads. After accepting eligible need- and merit-based financial aid, parents could borrow whatever the balance needed to finance each year’s cost of attendance for their student through this program from the federal government. Starting July 1, 2026, however, parents may only borrow up to $20,000 per year and $65,000 lifetime total per student. With the average out-of-state tuition alone (not counting room & board) at $30,780/year and $43,350/year for private non-profit universities, it’s not hard to see how families may need other resources to meet these costs, even with need-based financial aid and scholarships.
Graduate students may also feel the pinch. The Grad PLUS loan program will be eliminated for new graduate borrowers on July 1, 2026, as well, though current borrowers will be grandfathered into the program. Instead, grad students may borrow via Direct Unsubsidized Federal Loans, but even those loans are capped at $20,500/year ($100,000 lifetime) for nonprofessional degrees (example: a Master in History) and $50,000/year ($275,000 lifetime, including undergraduate PLUS borrowed) for professional degrees, such as law or medicine.
Repayment Programs Extensively Revised
The new law reduces payment options from multiple plans (SAVE, PAYE, Income-Based Repayment, and Income-Contingent Repayment) to just two programs; a 10- to 25-year standard repayment or the new Repayment Assistance Plan (RAP). Borrowers on eliminated plans must transition by July 1, 2028.
The RAP program will calculate payments between 1-10% of discretionary income (with a $10/month minimum payment) and balances after 30 years are forgiven. Interest deferrals on loans within the SAVE plan will end as of August 1, 2025, and current borrowers may see increases in payments and long-term interest expenses under the new programs.
What Federal Education Loan Changes Mean for College Planning
These major updates to federal education loans will change how families fund college today and in the future. Without this federal support, many colleges may step in with school-funded aid or tuition reductions. Otherwise, students and families may need to turn to private lenders, which often come with stricter qualification requirements and higher interest rates.
A smart approach is to make college financing a central part of your overall family financial plan, and to start early. At Truvium Wealth Management, we understand how vital a college education is to your children’s dreams and long-term goals. Planning ahead gives you more time and options to balance their education with other priorities, like retirement and legacy objectives.
If you’re ready to start planning, call (877) 277-2751 or email info@truviumwealth.com. Let’s explore how we can help make your children’s college aspirations a reality while keeping your broader financial goals on track.
About Scott
Scott Gegerson is the President of Truvium Wealth Management, a holistic financial planning firm based in Garden City, New York, serving individuals and business owners nationwide. He develops personalized financial plans and builds lasting client relationships grounded in trust and education. Since starting his career as a financial planner in 2001, Scott has been dedicated to helping clients grow and preserve their wealth. His passion stems from personal family experiences with poor financial planning, inspiring him to help his clients avoid similar pitfalls.
With a bachelor’s degree from Villanova University and the CERTIFIED FINANCIAL PLANNER® designation, Scott leads Truvium’s comprehensive approach to wealth management. He brings together advisors, attorneys, CPAs, and other professionals to create cohesive, streamlined financial strategies. His clients appreciate the firm’s white-glove service, personalized guidance, and commitment to alleviating financial stress.
Based in Rockville Centre, NY, Scott is a devoted father and active community member, helping out with his kids’ sports and volunteering locally. He enjoys golf, skiing, surfing, and leading a healthy lifestyle. Scott is also committed to cancer research through the Leukemia & Lymphoma Society, honoring his parents’ memory. To learn more about Scott, connect with him on LinkedIn.