Paying Your College Bill Is Different for 2025–26

As families begin receiving their 2025–26 college tuition bills, the strategies for covering costs may look very different from prior years. The One Big Beautiful Bill Act (OBBBA) introduced new loan limits for students and parents, creating both challenges and opportunities for planning ahead. Without careful preparation, families could find themselves facing unexpected funding gaps and more limited repayment options in the future.

Why This Year Matters

The federal student loan system has undergone significant changes. Currently, about 92% of student loans are originated and held by the federal government. Over the past decade, the rising use of federal PLUS loans and the increasing cost of education have contributed to a sharp increase in federal student debt.

The OBBBA was designed to reduce federal exposure to student loan losses and shift a larger share of financing to the private lending market. The law sets new borrowing limits and repayment rules that will phase in starting July 1, 2026. Students and parents currently enrolled in college, however, have a three-year transition period under the older PLUS loan rules—if certain conditions are met.

The Three-Year Transition Window

To qualify for the more flexible borrowing rules through June 30, 2026:

• A PLUS loan must have been taken for each student currently enrolled in a degree program.

• Simply having the student borrow under federal programs is not enough—the parent must also have taken out a PLUS loan.

This distinction matters. If the right loans are not in place, families may be forced into the new, more restrictive borrowing limits earlier than expected.

Planning is critical not just for the student currently in college, but also for younger siblings who may be impacted when the new rules take full effect.

What’s Changing on July 1, 2026

Beginning with the high school graduating class of 2026, the new borrowing caps will apply. For dependent undergraduate students and their parents, the combined maximum federal borrowing capacity will be about $92,000 over four years. Given today’s tuition levels, this often covers only a fraction of total costs.

This gap will likely require families to explore private student loans earlier in the college journey. Unlike federal loans, private loans involve a full underwriting process. Lenders evaluate credit, income, and existing debt, and rates vary by borrower profile.

For parents, the changes are even more significant. Beginning July 1, 2026:

• Parent PLUS loans will lose access to income-driven repayment (IDR) options and Public Service Loan Forgiveness (PSLF).

• Parents will instead be limited to fixed repayment schedules.

This shift underscores the importance of structuring loans before the new rules take effect.

Graduate and Professional Students Face New Rules

Graduate and professional programs will see some of the biggest changes. Under current rules, graduate students can borrow up to the full cost of attendance through federal loans, including Grad PLUS.

Starting July 1, 2026:

• Grad PLUS loans will be eliminated.

• Borrowing will be capped at $20,500 annually in federal loans.

• Remaining costs (often more than $50,000 per year) will need to be covered through private loans or other funding sources.

This is a fundamental shift that could reshape how students and families approach graduate and professional education.

Why Families Need a Funding-to-Graduation Plan

Historically, colleges provided financial aid information on a year-to-year basis, leaving families with uncertainty about the total cost to graduation. With the OBBBA changes, looking only one year ahead could leave students without the resources to finish their degree.

Key considerations include:

• Ensuring current borrowing structures maximize flexibility during the transition period.

• Accounting for the impact on younger siblings’ borrowing power.

• Evaluating the tradeoffs between federal and private loans, repayment options, and potential forgiveness programs.

The Bottom Line

Paying for college has always been a major financial decision for families. With new federal rules coming into effect, it is now more important than ever to plan carefully and understand the long-term implications of borrowing decisions.

Families should review:

• Current and future federal loan eligibility.

• The role of private loans and credit underwriting.

• Repayment and forgiveness options under both the current and new systems.

In many cases, professional guidance may help families navigate these complexities and make informed decisions.

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About Rigden Capital Strategies

Rigden Capital Strategies was founded on a simple belief: financial advice should be personal, transparent, and centered around your goals—not built on generic models or product-driven sales. With decades of combined industry experience, we’ve developed a process grounded in three core values: value, integrity, and progress.

As a fee-only fiduciary, we provide personalized, goals-based wealth planning services designed to adapt with your life. Our services include investment management, retirement and tax planning, and estate coordination. We use a mix of active and passive strategies to help clients navigate market changes with clarity and confidence.

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Disclosures

This article is provided for informational and educational purposes only. It should not be construed as personalized financial, investment, or legal advice. The information presented is based on current laws and regulations, which are subject to change. Past legislative or policy changes do not guarantee similar outcomes in the future. All loans involve risk, and borrowing decisions should be made after careful consideration of individual circumstances. Families may wish to consult with a qualified financial professional, tax advisor, or attorney before making any decisions.