Starting July 1, 2026, federal student loans won’t stretch as far as they used to. Under the new rules of the One Big Beautiful Bill Act (OBBBA):
- New Parent PLUS loans will be capped at $20,000 per year, with a lifetime maximum of $65,000 per child.
- Grad PLUS loans will be eliminated entirely for new borrowers after July 1, 2026.
For families who may have previously relied on PLUS loans to cover the full cost of attendance, this marks a seismic shift.
The Math That Doesn’t Add Up
College costs have climbed far beyond what federal limits will now allow.
- The average in-state public university cost is over $38,000 per year (tuition, fees, housing, books, and expenses).
- First-year undergraduate students can only borrow up to $5,500 in federal Direct Loans.
- That leaves a $33,000 annual gap (not including any scholarships or other aid).
Previously, Parent PLUS loans could fill that gap—parents could borrow up to the full cost of attendance, minus other aid. Now, many families will fall short with the $20,000 per year/$65,000 lifetime caps.
Who Gets Hit Hardest
- Parents of undergrads: While only about 4% of undergraduate parents use Parent PLUS, nearly 30% of current parent borrowers will max out the new annual cap, and 17% will hit the lifetime aggregate limit.
- Graduate students: Losing Grad PLUS is a game-changer. Students who once borrowed their full cost of attendance will now face strict annual and lifetime loan caps.
For these families, federal loans alone won’t cut it.
Where Private Loans Fill the Gap
When federal aid ends, private financing begins. But not all private loans are created equal. Banks and fintech lenders often emphasize speed and volume. Credit unions, by contrast, operate as not-for-profit cooperatives, reinvesting earnings into lower rates and better service for members.
Many credit unions also offer an education line of credit that allows families to:
- Apply once and access funds for up to four years.*
- Borrow only what’s needed each semester.
- Avoid reapplying and hard credit checks every year.
This flexibility is critical when federal limits force families to patch together multiple funding sources.
Planning Your New Funding Strategy
With OBBBA caps reshaping the financial aid landscape, families must plan smarter:
- Calculate your true gap: Add up total cost of attendance, subtract federal aid and scholarships, then measure what’s left.
- Evaluate options early: Don’t wait until July 2026—start exploring supplemental financing now.
- Consider long-term flexibility: Look for loan programs that adapt over four years, not just one semester.
Bottom Line
The days of relying on unlimited federal PLUS loans are over. But families don’t have to face the funding gap alone.
Credit union lending solutions offer competitive rates, flexible repayment, and a member-first approach that national banks and for-profit lenders can’t match.
Ready to find a loan that fits your new reality? Use our finder tool to explore private student loan options tailored to your needs.
*Subject to annual review and credit qualification. Must meet school’s Satisfactory Academic Progress (SAP) requirements.
