👩‍🎓Parent PLUS and Grad Loan Borrowers: 2 Ways the Big Beautiful Bill Impacts You
The “One Big Beautiful Bill Act” will change the course for student loan borrowers across the country. It may be overlooked now, but for Parents and Grad borrowers alike, these new provisions will cause an overhaul in how we think about funding higher education. Here’s two areas where the impact may be felt most:
- Parents looking to assist undergrad students
- Parent PLUS loans get capped – In the past, parents could fill the gap to help their child cover the cost of undergrad via Parent PLUS loans. These loans allowed parents to borrow up to the cost of attendance.
- In the past: Ex. Alex Smith attends Boston University at a 2025-2026 total cost of attendance of $94,427[1] for his freshman year. The annual freshman year federal loan limit for Alex to borrow on his own is only $5,500. In the past, the difference ($88,927) could be made up by Alex’s parents borrowing via the full amount in the form of Federal Parent PLUS loans.
- Now: The new Parent PLUS loan annual borrowing limit is capped at $20,000 per year, and in aggregate, $65,000 per child.
- My takeaway: The price of tuition isn’t decreasing. This will force many families into borrowing in the form of private student loans which are often more rigid: less payment flexibility and forgiveness provisions.
- Parent PLUS loans get capped – In the past, parents could fill the gap to help their child cover the cost of undergrad via Parent PLUS loans. These loans allowed parents to borrow up to the cost of attendance.
- Grad students
- Annual and lifetime caps for grad borrowers - Previously the “Grad PLUS program” that allowed grad students to borrow in federal loans up to the full cost of attendance of their full program.
- In the past: Ex. Jason Campbell attends a 2-year MBA program at New York University with a total cost of $131,818 for his freshman year[2]. After receiving $55,000 annually in scholarships, Jason’s cost of attendance is $66,818 annually. He would be eligible to borrow up to this cost of attendance each year up to a lifetime cap of $138,500.
- Now: Grad student borrowing will be capped at $20,500 per year with a lifetime grad school loan limit of $100,000. If completing the program in 2 years, his federal loan borrowing will be capped at $41,000 total over the course of the two years. He must shoulder the additional cost via private loan borrowing.
- My takeaway: Like Parent PLUS loans, this has the greatest impact for lower- or middle-income borrowers who aren’t able to fund grad programs without loans. The smaller annual borrowing limits will force these types of borrowers to again consider private student loans, which offer less payment flexibility and forgiveness provisions.
- Annual and lifetime caps for grad borrowers - Previously the “Grad PLUS program” that allowed grad students to borrow in federal loans up to the full cost of attendance of their full program.
What questions do you have about how the new tax bill may impact your situation? Feel free to reach out. I’m happy to help.
All the best,
Andrew Holmes, Certified College Planning Specialist™
Andrew@PlanWithFPS.com
617-630-4978
Check out my whitepaper: 5 College Planning Mistakes to Avoid
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[1] https://www.bu.edu/admissions/tuition-aid/tuition/
[2] https://www.stern.nyu.edu/programs-admissions/full-time-mba/financial-aid/tuition-cost-attendance