Millions of parents rely on federal Parent PLUS Loans to help their children pay for college. In fact, the Federal Reserve Bank of Dallas found that about 24% of federal loans were Parent PLUS Loans.
President Trump’s One Big Beautiful Bill (OBBB) makes significant changes to the federal loan system, particularly for parent borrowers. Thanks to the OBBB, there are new borrowing limits and fewer repayment and forgiveness options.
If you’ll have a child in college in the next few years, here’s what you need to know.
You’ll Have Fewer Loan Options
Under the existing loan programs, parents can borrow up to 100% of the cost of their child’s undergraduate degree. There are no annual or aggregate loan limits.
The OBBB changes that; for loans disbursed on or after July 1, 2026, the annual limit is $20,000, and the aggregate or lifetime limit is $65,000 per student. And, if the student is enrolled on a half-time or part-time basis, the limits are proportionately reduced.
Considering that the average cost of attendance for an in-state public school was $29,910, and $62,990 for private schools, the new limits mean that few parents can use federal parent student loans to cover the entire cost, and they’ll need to find other financing options.
Parents Will No Longer Qualify for Income-Driven Repayment
Currently, parents can qualify for income-contingent repayment (ICR), one of the available income-driven repayment (IDR) plans, if they first consolidate their loans with a Direct Consolidation Loan.
The OBBB eliminates this option. For loans disbursed on or after July 1, 2026, the only repayment option is the standard repayment plan, so you’ll have to make fixed monthly payments for 10 years.
If you have existing loans, consolidate your loans with a Direct Consolidation Loan and enroll in an ICR plan right away. Otherwise, you’ll lose access to this repayment option.
Parents Will No Longer Be Eligible for Public Service Loan Forgiveness (PSLF)
Parent PLUS Loan borrowers who work for a non-profit organization or government agency are currently eligible for PSLF. To qualify, they must consolidate their loans with a Direct Consolidation Loan and enroll in ICR. If they make 120 monthly payments while working full-time for a qualifying employer for 10 years, their remaining loan balance will be forgiven.
The OBBB eliminates the ICR plan, so Parent PLUS Loan borrowers will no longer be able to qualify for loan forgiveness under PSLF.
If you plan on applying for PSLF and have existing Parent PLUS Loans, avoid taking on any new loans on or after July 1, 2026. Any loans taken out after that date will be ineligible for ICR or PSLF. Consolidate your existing loans with a Direct Consolidation Loan and enroll in ICR as soon as possible so you’ll retain your eligibility for PSLF.
What Parent Borrowers Can Do Now
Existing Parent PLUS Loan borrowers should consolidate their loans and enroll in ICR now to get access to alternative payment options and loan forgiveness.
If you have a child you’ll take out loans for in the future, be aware that the new rules limit your ability to borrow money (and make it harder to manage the payments after your child leaves school). Any loans taken out on or after July 1, 2026 can only be repaid with a 10-year fixed repayment plan, so be sure to only borrow what you can comfortably afford to repay.
As a parent of a college student, explore these other financing options:
- Grants and scholarships: Help your child search for and apply for grants and scholarships issued by non-profit organizations, private companies, and schools. You can use The College Board’s Scholarship Search tool to locate potential opportunities.
- Federal undergraduate loans: Undergraduate students can qualify for federal Direct Subsidized and Unsubsidized Loans in their own names. To maximize their aid, help your child fill out the Free Application for Federal Student Aid (FAFSA).
- Federal work-study: Work-study programs allow the student to work part-time while in college, and use the money to pay for some of their education expenses.
- Private parent loans: With private student loans, parents can borrow up to 100% of their child’s total cost of attendance, so you can cover your child’s remaining tuition or room and board.
With ELFI, you can check your loan options and view potential rates with a soft credit check, which doesn’t impact your credit score. Explore the “Check Your Rate” tool to get started.
