Parent PLUS Just Got Rougher in Three Ways. If Your Kid Starts College This Fall, Redo the Math.

If your kid starts college this fall and you were planning to fill the tuition gap with a Parent PLUS loan, three things changed on July 1. The loan is capped now. The rate went up. And the flexible repayment plans you might have counted on are gone. The quote you got from the financial aid office in April does not match what you can actually borrow in August.

Here is what is different, in plain terms. Parent PLUS is the federal loan program parents use to cover whatever piece of a kid’s undergrad bill the student’s own federal loans plus savings and scholarships do not. It always let parents borrow up to the full cost of attendance. As of July 1, 2026, new borrowers face a hard ceiling: $20,000 a year per child, $65,000 total per child. The rate on loans first disbursed between now and next July is 9.07%, up from 8.94% last year, with a 4.228% origination fee taken off the top. And the income-driven repayment plans that used to give parents a soft landing when income dropped are gone. Standard 10-year plan only.

The government’s case for this is not crazy, and it deserves a fair hearing. Unlimited federal parent lending gave colleges room to push tuition higher year after year, because there was always another loan to write. Cap the loans, put pressure back on the price. If you have watched sticker prices at private schools sprint past inflation, you have felt that dynamic.

Here is the catch. The cap does not cut what the school costs. It just moves who is on the hook for the gap. If your kid’s private university lists $80,000 a year, the aid package covers $30,000, and your kid’s federal student loan is $5,500, you have $44,500 left to find. Parent PLUS used to write that whole check. Now the most it will write is $20,000. The other $24,500 has to come from cash, a private lender, an extra job, or a different school.

Run the payment math too. On $20,000 borrowed at 9.07% over 10 years standard, the monthly payment is about $254. Max the $65,000 lifetime cap across a four-year run, and once your kid graduates you owe roughly $825 a month for a decade. Real money, with no income-driven safety net if your job situation shifts.

So here is the move. If you already had a Parent PLUS loan out for this child before July 1, your old terms carry over for more borrowing on the same child. Confirm that at StudentAid.gov before you assume anything. If you are new to Parent PLUS this year, price the whole degree against the $20,000 annual cap before you send a deposit. Private student loans quoted for a parent cosigner today start under 9.07% for strong credit, so pull two quotes before defaulting to federal. And if the gap between the cap and the real cost is a moving-out-of-my-house-sized number, look at an in-state public or a lower-cost program with clear eyes. The cheapest way to stay inside the cap is to pick a school that fits inside it.

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