College Decision Day Countdown: Is Your Child Ready?
Millions of students across the country are eagerly sorting through their college acceptance letters, especially as College Decision Day is quickly approaching on May 1st. 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 Federal new loan limitations going into effect this summer. Most of those changes impact graduate students who used the Grad PLUS loan program and parents who used the PLUS loan program.
Below education loan expert Jack Wallace shares his insights on how parents and students can figure out if they can afford their dream school and what to do if your family finances fall short of covering the costs incurred in pursuing a post-secondary degree.
What are the loan limitations going into effect this summer that can impact how much borrowers can take out?
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.
Parent PLUS loans will have a $20,000 per year loan borrowing limit per dependent student with a lifetime limit of $65,000 per dependent student.
What impact might this have on students?
Given the inflated 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. It is best if this discussion takes place prior to submitting applications and getting the financial aid award letters upon acceptance to the college or university. 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 college costs?
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. Both the student and the parent/guardian that provides a majority of the students financial support must set up a FAFSA account. Approximately 85% 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 which you do not have to repay. The new Federal Parent PLUS loan limits and caps 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 as well as debt to income levels and credit history. Contact your bank or credit union to see if they offer Private student loans or if they can refer you to a financial institution that does. If you live in a state that has a non-profit or state authority that specializes in making Private student loans, make sure you contact them. Many times, they have better rates than for-profit financial institutions. Go to Education Finance Council website at www.efc.org to see if your state has one. Remember, go online, and begin looking for grants and scholarships when the student is in their junior year of high school.
About Yrefy
Yrefy was established in 2017 by student loan industry professionals to explore a new opportunity to help distressed private student loan borrowers and create a consistent return on investment for investors. Yrefy has a prudent solution to solving student loan defaults in a time when student debt is crushing generations. Yrefy has accomplished a strong competitive advantage because of its extensive experience in the financial, processing, sales, and underwriting world. The management team has a combined 250+ years of experience in the industry and is still constantly innovating and staying ahead of the competition.
