What you need to know about Parent PLUS loan caps, repayment changes

(InvestigateTV) — Major changes are coming to student loan borrowing and repayment options, and experts say parents and students need to prepare.

Starting July 1, parents will only be able to borrow up to $20,000 per year or $65,000 total through Parent PLUS loans for a child’s education, according to Robert Farrington, founder of The College Investor.

“That’s a big change compared to the current limits, which are uncapped up to the total cost of attendance. What’s important to realize is that Parent PLUS loans fill in a really hard place for kids to pay for college. So, students can typically only borrow $5,500 to $7,500 themselves. And as we know, college costs way more than that,” Farrington said.

Along with the new borrowing caps, Farrington said repayment plan options for Parent PLUS loans are also changing.

“So along with the borrowing limits, the repayment plan options are changing, and Parent PLUS loans will only have access to the standard repayment plan going forward. They will no longer have access to income-driven repayment plans, which also means that parents will no longer have access to loan forgiveness programs like public service loan forgiveness,” Farrington said.

Farrington said the new caps could prevent some parents from fully covering their child’s college costs and may drive more families toward private student loans.

He said because Parent PLUS loans will now be more comparable to private loans, interest rate will be a key factor for families weighing their options.

Desc/Soc

New caps could limit how much parents can borrow for a child’s education. Consumer Investigator Rachel DePompa shares what the expert says to watch for and how families may need to adjust.