By Katie Krumpter, NYLAG Senior Financial Counselor

It feels like student loans have been in the news nonstop for the past six years. First there was the Covid pause, then SAVE and the Biden attempt at forgiveness, what feels like a million lawsuits and most recently, the One Big "Beautiful" Bill (OBBB). There have been a lot of changes - some temporary and some permanent. Parent Plus loans, loans that parents take out for their children, have had some of the most significant changes but are talked about the least.

There are two major changes to Parent Plus loans beginning July 1. Historically, if parents qualified for Parent Plus loans, the amount they could borrow was limited only by the cost of attendance. Effective July 1, the maximum for Parent Plus loans is $20,000 annually and $65,000 lifetime per dependent. The second major change is that Parent Plus loans will no longer be eligible for any income-driven repayment plan or Public Service Loan Forgiveness.

If all of your loans were issued prior to July 1, 2026, you can make them eligible for both income-driven repayment plans and public service loan forgiveness. If your Parent Plus loans are consolidated prior to July 1, 2026, then they will continue to be eligible for income driven repayment plans and public service loan forgiveness.

Here is a table summarizing the changes in Parent Plus loans as of July 1:

The asterisks in the chart for the payment plans and PSLF eligibility are because you can lose those options if you take out any new federal loans after July 1, 2026. To give yourself the most flexibility, we are encouraging people with Parent Plus loans to consolidate their loans by July 1, 2026. To ensure the new consolidated loan has been issued by July 1 and you continue to retain IDR and PSLF eligibility, we recommend that you submit your consolidation application no later than April 1, 2026 (it takes four to six weeks to process the application, on average). You can find the consolidation application on the Student Aid site here: https://studentaid.gov/loan-consolidation/.

Sadly, these changes in Parent Plus loans will impact Black students the most, and low-income Black families even more so. In 2019, 26% of Black students had a parent take out Parent Plus loans to help fund their bachelor's degrees, with 44% of those families earning less than $30,000 annually. The limit to $20,000 annually may mean the difference between getting a college degree and not.

Schedule an appointment with a financial counselor today to discuss any questions and to prepare for the changes coming this summer.

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