The federal loan parents use to pay for college now has a limit of $20,000 a year per student: what changed and who is affected

Paying for college is one of the biggest expenses many American families face to guarantee a future for the younger generations. For years, parents could cover much of that cost with a federal loan that had almost no limit. But that changed this year.

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Under the One Big Beautiful Bill Act, signed into law on July 4, 2025, new Parent PLUS loans now have caps for the first time, according to the U.S. Department of Education.

What are the new limits on the federal college loan?

For parent PLUS loans taken out on or after July 1, 2026, parents can borrow:

• Up to $20,000 per year for each dependent student.
• Up to $65,000 in total per student, including amounts already paid off or forgiven.

Although there is an important exception. If the student or the parent already had a federal direct loan made before July 1, 2026, the loaner can keep borrowing under the previous rules.

According to Dartmouth College’s financial aid office, the limit is for three more academic years or the rest of the student’s expected time in school.

What do the new changes mean for students

The limits that students can borrow on their own, through direct subsidized and unsubsidized loans, did not change for undergraduates. Students also have a new lifetime limit of $257,500 across all their federal loans.

If a parent is denied a PLUS loan because of adverse credit, the student can borrow more in unsubsidized loans. But if the parents simply reach the new $20,000 or $65,000 cap, the student’s limit does not increase.

How will students and parents have to pay it back?

Parents with new loans will also have fewer repayment options. Parent PLUS loans can only be repaid under the new Tiered Standard Plan, which defines the monthly payments based on:

• The amount of your principal balance that you owe at the time that you enter the plan,
• The interest rate on your loans, and
• The length of the repayment period.

The maximum repayment periods are:

• 10 years: Less than $25,000 borrowed
• 15 years: Equal to or greater than $25,000 but less than $50,000
• 20 years: Equal to or greater than $50,000 but less than $100,000
• 25 years: Equal or greater than 100,000