Paying for college has never been simple. But in 2026, the rules have changed in ways that affect almost every family. New federal borrowing caps, the end of a popular repayment plan, and shifting aid policies mean the old playbook no longer works.
So how are families really covering the cost? Let’s break it down with real numbers.
What Does College Actually Cost Right Now?
Before we talk about how families pay, let’s look at the sticker prices.
For the 2025-26 school year, the College Board reports average published tuition and fees of about $11,610 per year at in-state public universities and roughly $43,350 per year at private nonprofit colleges. Add room, board, books, and transportation, and the total cost of attendance climbs even higher.
But here’s the thing: most families don’t pay the full sticker price. Grants, scholarships, and other aid bring the actual out-of-pocket cost down significantly.
According to the Sallie Mae "How America Pays for College" survey, families paid an average of $28,026 in total college costs during the 2024-25 academic year. That number includes every source of funding: savings, income, loans, and gifts from relatives.
How Do Families Piece Together the Money?
About 70% of students receive some form of financial aid. But aid alone rarely covers everything. Most families use a patchwork of sources.
Here’s how the typical funding mix breaks down:
- Grants and scholarships cover the largest share for many families. This includes federal Pell Grants, state grants, and merit or need-based scholarships from colleges themselves.
- Parent income and savings make up another major chunk. Many families pay part of the bill directly from paychecks or savings accounts like 529 plans.
- Student income and savings contribute too. Work-study jobs, summer earnings, and part-time work during school all add up.
- Federal student loans remain a key piece for most borrowers. Undergrad students can borrow Direct Subsidized and Unsubsidized Loans up to set annual limits.
- Parent borrowing through Parent PLUS loans has historically filled remaining gaps, though new caps are changing this (more on that below).
- Private student loans and payment plans round out the picture for some families.
How Does the Mix Differ by School Type?
The funding breakdown looks different depending on the type of school.
At public universities, in-state tuition is lower, so families rely more heavily on savings, income, and state grants. Federal loans often cover a larger percentage of the total bill. Scholarships from the school itself tend to be smaller but still meaningful.
At private nonprofit colleges, institutional aid does more of the heavy lifting. Many private schools offer generous merit and need-based grants that bring the net price closer to public school levels. But families at private schools are also more likely to borrow larger amounts, including Parent PLUS loans.
At community colleges, the combination of Pell Grants and state aid can sometimes cover tuition entirely. Students here are more likely to pay remaining costs from income rather than loans.
What Changed in 2026? The New Federal Landscape
Several major policy changes took effect in 2025 and 2026 that are reshaping how families borrow and repay.
The One Big Beautiful Bill Act (OBBBA)
Signed into law in 2025, the One Big Beautiful Bill Act introduced the most significant changes to federal student lending in decades.
Parent PLUS loan caps are now in effect. Parents can borrow a maximum of $20,000 per year and $65,000 over a student’s lifetime through the Parent PLUS program. Before this change, parents could borrow up to the full cost of attendance with no cap. For families at expensive schools, this creates a new gap that needs to be filled another way.
Grad PLUS loans are being eliminated. Starting in July 2026, new graduate and professional students will no longer be able to take out Grad PLUS loans. Current borrowers can continue with existing loans, but new enrollees will need to turn to private lenders or other funding sources.
Federal Loan Interest Rates
For the 2025-26 award year, federal loan interest rates are:
- 6.39% for Direct Subsidized and Unsubsidized Loans (undergraduate)
- 7.94% for Direct Unsubsidized Loans (graduate and professional)
- 8.94% for Parent PLUS Loans
These rates are fixed for the life of each loan but are set annually. They remain historically elevated compared to rates from just a few years ago.
The End of SAVE and the New RAP Plan
The SAVE (Saving on a Valuable Education) income-driven repayment plan has been terminated. In its place, the Department of Education is launching the Repayment Assistance Plan (RAP) on July 1, 2026.
Details are still emerging, but RAP is expected to differ from SAVE in important ways. Families who were counting on SAVE’s generous payment caps and forgiveness timeline should pay close attention to the new terms as they are finalized.
The Pell Grant: Preserved for Now
Congress considered cuts to the Pell Grant program, but the maximum award has been preserved at $7,395 for the 2026-27 academic year. For low- and moderate-income families, the Pell Grant remains one of the most important sources of college funding. It does not need to be repaid.
Changes at the Department of Education
The Department of Education’s workforce has been cut by roughly 50%. There are also discussions about transferring the federal student loan portfolio to the Small Business Administration (SBA). What this means for loan servicing and borrower support is still uncertain, but families should be prepared for potential changes in how they interact with their loan servicers.
What Does This Mean for Different Families?
These changes don’t hit everyone the same way. Your family’s situation depends on your income level, the type of school your student attends, and how much you were planning to borrow.
Lower-Income Families
The Pell Grant preservation is good news. If your expected family contribution is low, Pell plus state grants and institutional aid may still cover most of tuition at public universities and community colleges. The PLUS loan caps matter less here because lower-income families were less likely to use PLUS loans in the first place.
Key concern: The transition from SAVE to RAP could change repayment terms for students who borrow federal loans. Watch the new plan’s details closely.
Middle-Income Families
This is where the squeeze is real. Middle-income families often earn too much to qualify for large need-based grants but not enough to pay full price out of pocket. The new Parent PLUS caps of $20,000 per year mean parents who were borrowing $30,000 or $40,000 annually at expensive schools now face a gap.
Key concern: Families may need to reconsider school choice, increase savings, or explore private loan options to bridge the difference.
Higher-Income Families
Families with higher incomes and savings may feel less impact from the PLUS caps since they rely more on direct payment. However, those who used PLUS loans as a cash-flow tool (borrowing now, paying later) will need to adjust their strategy.
Key concern: Graduate students in the family will be most affected by the elimination of Grad PLUS loans starting July 2026.
What Are the Smartest Next Steps for Families?
No matter where you stand, here are practical things you can do right now.
- File the FAFSA early. The application opens on October 1st each year. Filing early maximizes your chances of receiving state and institutional aid that runs out.
- Run a net price calculator. Every college is required to have one on their website. It estimates what you would actually pay after grants and scholarships. Do this for every school on your list.
- Understand the new PLUS caps. If you were planning to borrow more than $20,000 per year as a parent, you need a backup plan now. Look into 529 savings, home equity options, or private loans.
- Research the RAP repayment plan. Once details are published, compare the terms to what you expected under SAVE. This may affect whether your student borrows the maximum in federal loans.
- Appeal your financial aid offer. Many colleges will reconsider your aid package if you can show changed circumstances or a better offer from a comparable school. This is sometimes called "professional judgment" or a financial aid appeal.
- Look beyond federal aid. Search for private scholarships through your employer, community organizations, and scholarship databases. Every dollar in free money reduces what you need to borrow.
- Model the full four-year cost. Don’t just look at freshman year pricing. Aid packages can change. Make sure you understand the total commitment before you enroll.
Frequently Asked Questions
How much does the average family actually pay for college?
According to Sallie Mae’s 2024-25 survey, the average family paid $28,026 per year from all sources combined. This includes grants, scholarships, savings, loans, income, and family contributions. The amount varies widely based on school type, family income, and available aid.
Are Parent PLUS loans still available in 2026?
Yes, but with new limits. Under the One Big Beautiful Bill Act, Parent PLUS loans are now capped at $20,000 per year and $65,000 over a student’s lifetime. Previously, parents could borrow up to the full cost of attendance. These caps mean some families will need to find additional funding sources.
What happened to the SAVE repayment plan?
The SAVE income-driven repayment plan has been terminated. A new plan called the Repayment Assistance Plan (RAP) launches on July 1, 2026. Borrowers who were enrolled in SAVE or considering it should monitor Ed.gov for details on the new plan’s terms and eligibility.
Is the Pell Grant being cut?
No. Despite proposed cuts, Congress preserved the Pell Grant at its current maximum of $7,395 for the 2026-27 award year. The Pell Grant remains available to undergraduate students who demonstrate financial need and does not need to be repaid.
The college funding landscape is more complex than ever. But families who understand the new rules, explore all their options, and plan early will be in the strongest position. You don’t have to figure this out alone.
CollegeLens.ai helps families build a clear, personalized plan to pay for college. From financial aid strategy to school selection, we help you see the full picture before you commit.
-- Sravani at CollegeLens