Financial Aid Changes You Don't Know About
I have mixed feelings about a recent change to how financial aid works, but I'm clear on one thing:
It's a big, big freakin' deal.
Gather round and listen up if you've got a youngster headed to college in Fall of 2026 and beyond, and you're hoping to get financial aid.
Background
The rules about borrowing for college are now dramatically different. The main reason seems to be that the government is losing 19 cents on the dollar, and approximately 10 million borrowers are in default.
Seems like something had to be done.
The New PLUS
The Big Beautiful Bill overhauled the rules about borrowing for college. Specifically, the PLUS Loan, commonly referred to as the Parent Loan.
Up until this year, parents could borrow the entire cost of attendance of their kid's college. That means tuition, room, board and fees.
And the PLUS loan required very little underwriting. You could qualify for $60-90K if you had a pulse and could fog a mirror.
I'm exaggerating a smidge, but I've witnessed Pearl (wife/head of financial aid here) help parents with horrible credit, with mortgage payments years in arrears, you name it, obtain 65-75K annually, in a matter of minutes!
Over the years, we've had dozens of families decide to borrow 200K-300K, even more, to send their kids to expensive, 80-95K per year private colleges.
(I'm not judging, I' just calling it as I sees it.)
Lower Borrowing Limits - Now What Happens?
Under the new law, this is no longer possible. The new Parent Loan limits are drastically lower:
Up to $20,000 per year, per child, maximum $65,000. That's 65K total, for all four years.
No more putting the whole bill on your tab and figuring it out later.
What does this mean for us, going forward? Some guesses:
- Maybe colleges will cut their prices? (Hah. Don't think so, especially if they're losing federal funds as threatened.)
- Families will look seriously at colleges offering better deals. There will be a whole lotta bargaining going on in a few months, and beyond (this is personally exciting, I love haggling with colleges for our clients)
- In-state flagship and other schools will get much harder to get into, as more students opt for cheaper in-state tuition instead of borrowing their way to private universities
- We'll see an increase in private lending by banks and lenders like SoFi. No way the underwriting is anywhere as easy as the PLUS Loan. Rates and terms will be much less attractive than the PLUS, too.
- Credit card balances could go up, if parents pay for college that way
- Then again, maybe families won't take on as much debt as their predecessors, if the lack of borrowing options force them to look at less expensive colleges
Offer
If you want to be able to comfortably afford your kids' college tuitions, without drastic changes to your lifestyle or decimating your retirement savings...
The best defense is a good offense. If you want expert help getting every last dollar of free grants and scholarships you deserve...
...plus high powered assistance negotiating your financial aid and merit aid offers...
...and a seasoned pro to prepare and help you file your financial aid applications, respond to countless nickel and dime questions that crop up AFTER you file..
..and generally speaking, take you by the hand and lead you through the ENTIRE complex, stressful and landmine-laden process of applying for aid today...
You should take a hard look at our Financial Aid Warrior consulting program, before we shut it down this Fall.
Pearl, a former prosecutor in Queens County NY back in the day, handles the financial aid applications and process for approximately 400 families per year. She's thorough and tenacious. (Yes, I'm biased but I speaketh the truth.)
We're opening the doors for new clients now, before October 1, when the FAFSA and CSS Profile are released.
Instant "Early Action" Scholarship: 10% Off
Use the coupon code PEARL10 or PEARL10-EZ for the 1-pay or 5-pay options.
Here's where to learn more:
Speak soon,
- Andy "Charter Member, Pearl Fan Club" Lockwood
P.S. Not to complicate things, but the rules about how to PAY BACK your loans also changed. The deadline to enroll in the current repayment plans is July 2026.
Then the best repayment options are sunsetted, as the bureaucrats say.
Here's where you can do a consult with Pearl to pick the right way to go.