For years, Parent PLUS loans were the fallback plan. If your family's savings, financial aid, and your student's federal loans did not cover the full cost of attendance, you could borrow the rest through Parent PLUS with no cap. That is no longer the case.
The One Big Beautiful Bill Act, signed into law on July 4, 2025, caps Parent PLUS borrowing at $20,000 per year and $65,000 over the life of the loan per dependent student, starting July 1, 2026. If your student is heading to a school that costs $40,000, $50,000, or $60,000 a year after aid, Parent PLUS alone will not fill the gap anymore. For many families, this means making hard decisions they did not expect to face.
This guide walks through your real options, including some that are uncomfortable. Not every option here will be available to every family. But knowing the full picture helps you make a choice that works for your situation.
First, Understand What Changed
Before July 1, 2026, there was no annual or lifetime cap on Parent PLUS loans. If you passed a basic credit check, you could borrow up to the full cost of attendance minus other aid. Many families used PLUS to cover gaps of $25,000, $30,000, or more per year.
Now, the rules are different for any new PLUS loans disbursed on or after July 1, 2026:
- Annual cap: $20,000 per student per year
- Lifetime cap: $65,000 per dependent student
- Repayment: New PLUS loans are only eligible for the Standard Repayment Plan. Income-driven options such as ICR are no longer available to new borrowers. Federal Student Aid has the current rules.
- Interest rate: For 2026-27, the rate is 9.07% fixed, plus a 4.228% origination fee. That rate applies to loans disbursed July 1, 2026 through June 30, 2027.
There is one exception: if you already had a Parent PLUS loan disbursed before July 1, 2026, you may be able to continue borrowing under the old (uncapped) rules for up to three more academic years or until your student finishes their current program, whichever comes first. Check with your school's financial aid office to see if this transition provision applies to you.
Before You Borrow More: Try to Shrink the Gap
Borrowing should be the last step, not the first. Before you take on any additional debt, see if you can reduce the gap itself.
Appeal Your Financial Aid Package
If your family's financial situation has changed since you filed the FAFSA, or if you received a better offer from a comparable school, call the financial aid office and ask for a professional judgment review. Be specific. Bring documentation: a job loss letter, medical bills, a competing offer letter.
Not every appeal succeeds, but NASFAA reports that many schools have formal appeal processes and the worst they can say is no. Even an extra $2,000 to $3,000 per year in grants reduces what you need to borrow.
Find Scholarships (It Is Not Too Late)
Scholarship searching does not end when you commit. Local community foundations, employer-sponsored awards, professional associations, and niche scholarships often have summer deadlines and smaller applicant pools. According to the Sallie Mae "How America Pays for College" study, scholarships and grants cover about 30% of college costs for the average family.
Every $1,000 in free money is $1,000 you do not borrow at 8% or 9% interest.
Reduce Costs Directly
This might mean choosing a cheaper meal plan, living off-campus (if it is actually cheaper in your area, which is not always the case), buying used textbooks, or skipping optional fees where possible. Small savings add up across four years.
Option 1: Private Parent Loans
Rankings
Compare private student loan options
Compare College Ave, Earnest, and Sallie Mae — with Sallie's rate matched to this program where available.
- Rank #1Editor's Pick
Parent
College Ave
Best for: Students who want flexible repayment options and no origination fees
- 0.25% rate reduction with auto-pay
- Four in-school repayment options
- No application, origination, or prepayment fees
- Borrow from $1,000 up to 100% of cost of attendance
Apply NowRates
Lowest Rate 1.94%
1.94% - 17.99% fixed APR, 3.89% - 17.99% variable APR
Disclosures+
College Ave's student loan products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or BTG Pactual Bank, N.A., member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply. (1) All rates include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation. (2) As certified by your school and less any other financial aid you might receive. Minimum $1,000. (3) This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (APR): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. Information advertised valid as of 8/18/2026. Variable interest rates may increase after consummation. Approved interest rate will depend on creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of the Flat Repayment Option with the shortest available loan term.
- Rank #2
Parent
Sallie Mae
Best for: Undergraduate and graduate students, and parents, comparing competitive fixed- and variable-rate private student loans
- Competitive variable and fixed rates
- Multiple repayment options
- Cosigner release available
- No origination fees
Apply NowRates
Lowest Rate 1.95%
1.95% - 17.49% fixed APR, 3.75% - 16.95% variable APR
Disclosures+
Undergraduate School Loan/Smart Option Student Loan: Examples of typical transactions for a $10,000 Smart Option Student Loan with the most common fixed rate, Fixed Repayment Option, two disbursements, a 4-year in-school period, and a 6-month grace: For a borrower with the shortest loan term, it works out to 16.16% fixed APR, 51 payments of $25.00, 119 payments of $296.32 and one payment of $41.82, for a total loan cost of $36,578.90. For a borrower with the longest loan term, it works out to 16.38% fixed APR, 51 payments of $25.00, 177 payments of $265.54 and one payment of $173.00, for a total loan cost of $48,448.58. Loans that are subject to a $50 minimum principal and interest payment amount may receive a loan term that is less than 10 years. A variable APR may increase over the life of the loan. A fixed APR will not. Information advertised valid as of 08/25/2026. Rates: Advertised APRs for undergraduate students assume a $10,000 loan with a 4-year in-school period, a 6-month grace, and the longest loan term offered. Interest rates for variable rate loans may increase or decrease over the life of the loan based on changes to the 30-day Average Secured Overnight Financing Rate (SOFR) rounded up to the nearest one-eighth of one percent. Advertised variable rates are the starting range of rates and may vary outside of that range over the life of the loan. Interest is charged starting when funds are sent to the school. With the Fixed and Deferred Repayment Options, the interest rate is higher than with the Interest Repayment Option and Unpaid Interest is added to the loan's Current Principal at the end of the grace/separation period. To receive a 0.25 percentage point interest rate discount, the borrower or cosigner must enroll in auto debit through Sallie Mae. The discount applies only during active repayment for as long as the Current Amount Due or Designated Amount is successfully withdrawn from the authorized bank account each month. It may be suspended during forbearance or deferment. Cosigner Release: Only the borrower may apply for cosigner release. To do so, they must first meet the age of majority in their state and provide proof of graduation (or completion of certification program), income, and U.S. citizenship or permanent residency (if their status has changed since they applied). In the last 12 months, the borrower can't have been past due on any loans serviced by Sallie Mae for 30 or more days or enrolled in any hardship forbearances or modified repayment programs. In addition, the borrower must have paid ahead or made 12 on-time principal and interest payments on each loan requested for release. The loan can't be past due when the cosigner release application is processed. The borrower must also demonstrate the ability to assume full responsibility of the loan(s) individually and pass a credit review when the cosigner release application is processed that demonstrates a satisfactory credit history including but not limited to no: bankruptcy, foreclosure, student loan(s) in default or 90-day delinquencies in the last 24 months. Requirements are subject to change.
- Rank #3
Parent
Earnest
Best for: Borrowers who want a zero-fee¹ lender with flexible repayment options² across undergrad, grad, and professional school programs
- 0.25% Auto Pay³ discount plus 0.25% Loyalty⁴ discount for eligible returning borrowers
- No origination fees, late fees, or prepayment penalties¹
- Borrow $1,000⁵ to $400,000 with 5, 7, 10, 12, or 15-year terms⁶
- Four repayment options², a 9-month grace period⁷, and cosigner release for eligible borrowers⁸
Check EligibilityRates
Lowest Rate 2.29%
2.29% - 16.24% fixed APR, 4.74% - 16.60% variable APR
Disclosures+
Earnest Private Student Loans are subject to credit approval. ¹Earnest does not charge fees for origination, late payments, returned check, or prepayments. Florida Stamp Tax: For Florida residents, Florida documentary stamp tax is required by law, calculated as $0.35 for each $100 (or portion thereof) of the principal loan amount, the amount of which is provided in the Final Disclosure. Lender will add the stamp tax to the principal loan amount. The full amount will be paid directly to the Florida Department of Revenue. Certificate of Registration No. 78-8016373916-1. ²Repayment terms and repayment options available vary based on loan type. ³You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment from a checking or savings account. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. It is important to note that the 0.25% Auto Pay discount is not available when loan payments are deferred during the interim period as a result of selecting the deferred repayment option. ⁴To be eligible for the Loyalty Discount, applicants must have previously obtained an Earnest Private Student Loan and apply using the same email address associated with that loan. Only one Loyalty Discount may be applied per eligible Earnest Private Student Loan. Not all applicants may qualify. This offer cannot be combined with Earnest’s Rate Match program. Earnest may modify or discontinue this offer at any time and without notice, however, once a Loyalty Discount is earned, it will not be taken away. ⁵Residents of Hawaii must request a loan of at least $1,501. ⁶Available interest rates are subject to change. Interest rates as of 03/19/2026. Earnest’s Loan Cost Examples: 1.) These examples provide estimates based on principal and interest payments beginning immediately upon loan disbursement. Variable annual percentage rate ("APR"): A $10,000 loan with a 15-year term (180 monthly payments of $152.84) and a 16.85% interest rate without Auto Pay (16.85% APR) would result in a total estimated payment amount of $27,511.20. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 15-year term (180 monthly payments of $150.30) and a 16.49% interest rate without Auto Pay (16.49% APR) would result in a total estimated payment amount of $27,054.10. 2.) These examples provide estimates based on interest-only payments while in school. Variable interest rate: A $10,000 loan with a 15-year term (180 monthly payments of $152.84) and a 16.85% interest rate without Auto Pay (16.85% APR) would result in a total estimated payment amount of $35,515.14. For a variable loan, after your starting rate is set, your rate will then vary with the market. Your actual repayment terms may vary. Other repayment options are available. The calculation assumes that the “in-school” period is 4 years (48 months) and includes our 9 month grace period, during which the monthly payment will be $140.42 for 57 months. Fixed interest rate: A $10,000 loan with a 15-year term (180 monthly payments of $150.30) and a 16.49% interest rate without Auto Pay (16.49% APR) would result in a total estimated payment amount of $34,886.94. Your actual repayment terms may vary. Other repayment options are available. The calculation assumes that the “in-school” period is 4 years (48 months) and includes our 9 month grace period, during which the monthly payment will be $137.42 for 57 months. 3.) These examples provide estimates based on fixed $25 payments while in school. Variable interest rate: A $10,000 loan with a 15-year term (180 monthly payments of $253.39) and a 16.85% interest rate without Auto Pay (14.92% APR) would result in a total estimated payment amount of $47,035.20. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed interest rate: A $10,000 loan with a 15-year term (180 monthly payments of $246.61) and a 16.49% interest rate without Auto Pay (14.65% APR) would result in a total estimated payment amount of $45,814.80. Your actual repayment terms may vary. Other repayment options are available. The calculation assumes that the “in-school” period is 4 years (48 months) and includes our 9 month grace period, during which the monthly payment will be $25.00. 4.) These examples provide estimates based on deferred payments. Variable interest rate: A $10,000 loan with a 15-year term (180 monthly payments of $275.17) and a 16.85% interest rate without Auto Pay (14.67% APR) would result in a total estimated payment amount of $49,530.60. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed interest rate: A $10,000 loan with a 15-year term (180 monthly payments of $268.03) and a 16.49% interest rate without Auto Pay (14.39% APR) would result in a total estimated payment amount of $48,245.40. Your actual repayment terms may vary. Other repayment options are available. It is important to note that the 0.25% Auto Pay discount is not available when the deferred repayment option has been selected and the loan is in the interim period. The calculation assumes that the “in-school” period is 4 years (48 months) and includes our 9 month grace period, during which the monthly payment will be $0. ⁷Nine-month grace period is not available for borrowers who choose our Principal and Interest Repayment plan while in school. ⁸To qualify for automatic cosigner release, the outstanding principal balance of your loan must be paid down to 50% or less of the original principal balance. The primary borrower must have made 36 months of required payments after the end of the Interim Period. The primary borrower must meet our eligibility and minimum credit requirements. Additional terms and conditions may apply. To request cosigner release, the primary borrower must have made 12 consecutive, monthly on-time principal and interest payments (or an amount equal thereto) immediately preceding the cosigner release application. The primary borrower must satisfy certain eligibility and credit criteria at the time of application. Additional terms and conditions may apply. ⁹Includes 0.50% combined Auto Pay and Loyalty discounts. Actual rate and available repayment terms will vary based on your financial profile. Fixed annual percentage rates (APR) range from 2.79% to 16.74% (2.29% - 16.24% with Auto Pay and Loyalty discounts). Variable annual percentage rates (APR) range from 5.24% to 17.1% (4.74% - 16.6% with Auto Pay and Loyalty discounts). Earnest variable interest rate student loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent plus a margin and will change on the 1st of each month. The rate will not increase more than once a month, but there is no limit on the amount that the rate could increase at one time. Our lowest rates are only available for our most credit qualified existing cosigned loan borrowers who receive the 0.25% Loyalty discount and requires selection of our shortest term offered, full principal and interest payment while in school, and enrollment in our 0.25% Auto Pay discount. Enrolling in Auto Pay is not required as a condition for approval. Interest rates are subject to change. Earnest Private Student Loans are made by FinWise Bank, Member FDIC. FinWise Bank, 756 East Winchester, Suite 100, Murray, UT 84107. Earnest student loans are serviced by Earnest Operations LLC, 300 Frank H. Ogawa Plaza, Suite 340, Oakland, CA 94612. NMLS #1204917, with support from Higher Education Loan Authority of the State of Missouri (MOHELA) (NMLS# 1442770). FinWise Bank and Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by agencies of the United States of America. © 2026 Earnest LLC. All rights reserved.
If you still have a gap after exhausting free money and federal options, private parent loans are the most direct replacement for the PLUS borrowing you can no longer access.
How They Work
Private lenders like Sallie Mae, College Ave, SoFi, Earnest, and Citizens offer loans specifically for parents. You can typically borrow up to the full cost of attendance minus other aid, similar to how PLUS worked before the cap.
What to Know
Interest rates vary by credit score. Private parent loan rates span a wide band, and the bottom of any advertised range goes to borrowers with excellent credit. With strong credit you may qualify for a rate below the 9.07% Parent PLUS rate; with fair or poor credit it will likely be higher. Our private student loan comparison page carries current ranges, which move with the market.
No origination fee. Most private lenders do not charge the 4.228% origination fee that PLUS loans carry. On a $20,000 loan, that fee alone costs $845 upfront with PLUS.
Fewer safety nets. Private loans generally do not offer income-driven repayment, deferment during financial hardship, or loan forgiveness programs. If you lose your job or face a medical emergency, your options are limited to whatever the lender offers, which may be very little.
You need to comparison shop. Rates, terms, and repayment options differ significantly across lenders. Get quotes from at least three lenders before signing anything. Many lenders let you check rates with a soft credit pull that does not affect your score.
Private parent loans can work well for families with good credit and stable income. They are riskier for families without that cushion.
Option 2: Home Equity Loans or HELOCs
If you own a home and have built up equity, a home equity loan or home equity line of credit (HELOC) is another way to borrow for college costs. Interest rates on home equity products are often lower than both PLUS and private student loans, sometimes in the 6% to 8% range as of early 2026.
The Risk Is Real
This needs to be said plainly: you are putting your home on the line. If you cannot make payments, you could lose your house. This is not a theoretical risk. It happens.
Home equity borrowing also reduces the financial cushion your home provides for retirement or emergencies. And unlike student loans, there is no forgiveness program if things go wrong.
This option makes sense only if you have significant equity, stable income, and a clear repayment plan. If any of those are uncertain, this is not the right path.
Option 3: Your Student Borrows More
With the PLUS cap in place, some families will ask: can the student take on more of the borrowing?
Federal Student Loan Limits
Under the new rules effective July 1, 2026, undergraduate students can borrow up to $7,500 per year in federal Direct Loans (for dependent students in years 3 and 4; less in earlier years). The aggregate limit is $31,000 for dependent undergraduates over their entire program.
If federal student loans are already maxed out, your student would need to turn to private student loans in their own name, usually with a parent as cosigner.
Be Honest About This Tradeoff
Shifting borrowing from parent to student means your child starts their adult life with more debt. A student who borrows $40,000 at 7% interest will pay roughly $465 per month for 10 years. That is $465 a month before rent, car payments, or saving for anything else.
This is not inherently wrong. Many students take on loans and manage them. But it is a decision that should be made with eyes open, not as a default because no one talked about the alternatives.
Option 4: Payment Plans for the Remainder
Most colleges offer interest-free monthly payment plans through their bursar's office. These plans typically split your semester balance into 4 to 5 monthly installments for a small enrollment fee ($25 to $75).
Payment plans do not reduce what you owe. They spread it out. This can help if you have income coming in each month but cannot write a single large check. Combining a payment plan with partial borrowing can reduce the total amount you need in loans.
Not every family has the monthly cash flow to make this work. But if you do, a payment plan costs far less than any loan over time.
Option 5: Reconsider the School
This is the option nobody wants to talk about. But it is the most important one to put on the table.
If filling the gap means borrowing $30,000 or more per year beyond what federal loans cover, or if total borrowing for a four-year degree will exceed $80,000 to $100,000, it is worth asking whether a different school would get your student to the same place with less financial strain.
This Is Not Giving Up
Choosing a less expensive school is not settling. It is making a financial decision that protects your family. A student who graduates from a state school with $25,000 in debt has far more freedom than a student who graduates from a private university with $120,000 in debt. Both have degrees. One has options.
According to College Board's Trends in Student Aid data, the average published in-state tuition and fees at a public four-year college is about $11,950 per year, compared to $45,000 at a private nonprofit. That is roughly a $132,000 difference over four years before aid.
Transferring is also an option. Starting at a community college or a more affordable four-year school for a year or two and then transferring can save tens of thousands of dollars. Many strong schools actively recruit transfer students.
The Emotional Side
Telling your child you cannot afford their dream school is one of the hardest conversations a parent can have. It feels like you are taking something away. But the alternative, saddling your family or your child with six figures of debt, has consequences that last decades.
If you are in this situation, you are not alone. The PLUS cap exists specifically because too many families were borrowing amounts they could not realistically repay. The new limit is painful, but it is also a guardrail.
Challenges to Watch
Do not rush into private loans without comparing. Interest rates, fees, and repayment terms vary widely. A 2% difference in interest rate on a $50,000 loan can mean $10,000+ more in total payments over the life of the loan.
Watch out for variable rates. A low introductory rate that adjusts upward can end up costing more than a fixed-rate loan. If you choose a variable rate, understand the cap and how often it adjusts.
Understand cosigner responsibilities. If you cosign a private loan for your student, you are equally responsible for the full balance. If your student cannot pay, the lender will come to you. Some lenders offer cosigner release after a set number of on-time payments, but not all do.
Do not ignore the retirement tradeoff. Every dollar you borrow for college is a dollar that is not going toward retirement savings. Unlike student loans, there is no financial aid for retirement. Be realistic about what you can take on without jeopardizing your own future.
The Bottom Line
The Parent PLUS cap is a major change. If your family relied on unlimited PLUS borrowing to make a school work, you now need a new plan. Start by shrinking the gap through appeals, scholarships, and cost reductions. If borrowing is still needed, compare private parent loans carefully, be cautious with home equity, and think hard before shifting the burden to your student.
And if the numbers still do not add up, give yourself permission to consider a different path. The best school for your student is one your family can afford without drowning in debt.
Need help comparing what different schools will actually cost your family? CollegeLens breaks down your real out-of-pocket costs so you can see the full picture before you borrow.
Sravani at CollegeLens
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