Upcoming changes to Parent PLUS loans could affect students and families who can’t afford to pay for college or do not receive sufficient financial aid.
The changes, which will go into effect Wednesday, July 1, are part of President Donald Trump’s One Big Beautiful Bill Act. New borrowing limits for parents will cap college loans at $20,000 per year and $65,000 total, whereas borrowing was previously capped at the full cost of attendance. The limits only apply to new Parent PLUS loanees, as existing borrowers may continue to borrow up to the amount of attendance until their child graduates.
Parent PLUS loans are offered through the Department of Education to eligible parents or guardians after families have exhausted scholarships, grants and student loans, which are usually limited to $5,500 to $7,500 per academic year, founder of The College Investor Robert Farrington said.
The average amount of federal loans offered to students at Texas A&M falls below that amount. Students who are still dependents of their parents are eligible for $3,500 their freshman year, $4,500 their sophomore year and $5,500 their junior and senior years, according to Executive Director of Scholarships and Financial Aid at A&M Bridgette Ingram.
“If there’s any remaining gap, parents have to step in one way or the other, and the options are really private student loans or Parent PLUS loans,” Farrington said. “So they’re kind of like the last resort to pay for college.”
In the 2024-25 academic year, 5% of enrolled freshmen were supported by Parent PLUS loans. The average support amounted to $19,908, the highest of any other kind of loan. Now, families will be unable to take out that same amount each year without exceeding the new $65,000 cap, leaving students who would have otherwise relied on the help of Parent PLUS loans to turn to other funding methods to cover the remaining costs.
“They can look at alternative loans; we also have payment plans at Texas A&M,” Ingram said. “We have emergency tuition fee loans and short-term loans.”
Typically, students from low-income families, or “an individual whose family’s taxable income for the preceding year did not exceed 150 percent of the poverty level amount,” receive enough scholarships and financial aid to cover their tuition, Ingram noted. Families that are not classified as low income but have limited savings are the most likely applicants to take advantage of Parent PLUS loans.
Families may now be forced to turn from Parent PLUS loans to private loans, which could have potential downsides.
“[Private loans] are credit based, and so families that don’t have as good of credit may get a higher interest rate,” Ingram said. “There are fewer protections on those alternative loans because they come from private lenders.”
Ingram said that parents and students should research alternative loans and different ways to reduce the cost of attendance.
“If living at home is cheaper, then that could reduce the cost of attendance,” Ingram said. “Or if a student is working while in school, that can also reduce that cost.”
Ingram and Farrington agreed that changes to Parent PLUS loans may cause families to choose schools that are more affordable or offer more scholarships.
“You have education, which is getting your bachelor’s degree,” Farrington said. “Then you have experience. What does that dorm situation, housing situation look like? And they are very different.”
Farrington also hopes that changes to loan programs will stir up conversation about the financial harm that can be done when prospective students choose to attend a school based on the experience it offers rather than the education.
Another option that families have is choosing alternative school types.
“It may be that students choose to go to a community college for two years somewhere else before coming to a four-year public institution,” Ingram said.
Transfer students make up around 4% of the undergraduate population at A&M. Many of those students chose to attend Blinn College for two years before attending A&M. Changes in loan programs could drive even more students to make that decision.
Ultimately, Ingram encourages students and families to consider all their financial options before deciding which school to attend.
“I just think that this is a big change, and parents and students do have to know about this coming into college,” Ingram said. “It’s important that we try to get the word out.”
