Parent PLUS Loan Changes: New Borrowing Caps Explained

Beginning July 1, 2026, the Department of Education will begin implementing changes to the Parent PLUS student-loan program. These changes are part of President Donald Trump's student-loan repayment overhaul signed into law in his "big beautiful" spending legislation.

The overhaul includes new income-driven repayment plans and lower borrowing caps. The department is planning to impose a $65,000 lifetime borrowing limit per dependent student, or $20,000 per year. This will limit parents' ability to use federal financing to help send their children to college.

Additionally, parents who take out loans after July 1 will only have access to the standard repayment plan. They will not be able to enroll in the new Repayment Assistance Plan, which is replacing existing income-driven repayment plans. Existing borrowers can continue borrowing at their existing terms until 2028.

The Education Department is rolling out specific changes that will fundamentally alter how parents finance their children's education. Currently, the Parent PLUS program allows parents to borrow up to the full cost of attendance. However, the new regulations introduce strict limits.

The new borrowing cap applies to parents taking out new loans in 2026. The specific limits are:

• $65,000 lifetime borrowing limit per dependent student
• $20,000 maximum borrowing per year

These limits could leave some parents without sufficient financing to pay for their kids' education. For existing Parent PLUS borrowers who took out loans before July 1, 2026, there is a grandfather clause. These borrowers can continue borrowing at their existing terms until 2028.

Beyond the borrowing caps, repayment options are also shrinking. Parents taking out loans after the July 1 deadline will be restricted to the standard repayment plan. They will lose access to the new Repayment Assistance Plan, which the Department of Education is rolling out to replace existing income-driven repayment plans.

A September analysis from the Brookings Institution provided data regarding current borrowing trends. Based on data from the National Postsecondary Student Aid Survey and the College Scorecard, 7.7% of undergraduate students had parents who took out Parent PLUS loans during the 2019-2020 school year. The average loan amount was $16,272.

Higher-income families tend to borrow higher amounts. The analysis indicated that among families earning more than $130,000 annually, 46% took out more than $20,000 in Parent PLUS loans each year.

However, the data reveals a disparity in repayment burden. The analysis stated: "However, these patterns mask a crucial insight: While lower-income families borrow smaller absolute amounts, they face significantly higher debt-to-income ratios." This means the repayment burden tends to be greater for lower-income families despite borrowing at lower amounts.

Currently, Parent PLUS loans have the highest interest rates among federal student loans, standing at 8.94%. Despite the high rates, these loans offer advantages, including access to more flexible repayment options and interest deductions on federal taxes.

The new limits may force parents to look for alternative options to help pay for their children's educations. One potential alternative is turning to private lending. However, private loans tend to have higher interest rates with riskier terms compared to federal options.

These changes to the Parent PLUS program are part of a wider effort by the Department of Education to curb excessive student-loan borrowing. The department is also eliminating the Grad PLUS loan program.

New borrowing caps are being placed on graduate and professional students as well. The goal of these comprehensive changes is to limit the total amount of federal debt accumulated by families and students.

When do the new Parent PLUS loan changes take effect?
Beginning July 1, 2026, the Department of Education will begin implementing the new borrowing caps and repayment restrictions.

What is the new borrowing limit for parents?
The department is imposing a $65,000 lifetime borrowing limit per dependent student, or $20,000 per year.

Will existing borrowers be affected?
Parents who took out loans before July 1, 2026, can continue borrowing at their existing terms until 2028. However, parents taking out loans after July 1 will only have access to the standard repayment plan.