Paying for college is about to get significantly harder for many families across the tri-state area and beyond, as sweeping changes to federal student aid take effect. At the center of the shift are new limits on the federal Parent PLUS loan, a program that parents have long relied on to help cover the cost of their children's education. The changes are forcing families to rethink how they will finance a college degree.
Until now, Parent PLUS loans have allowed families to borrow up to the full cost of attending college. But starting July 1, the program will cap annual borrowing at $20,000 a year. Parents will also face a new lifetime limit of $65,000, a ceiling that could fall well short of the total cost of a four-year degree at many institutions.
For families already stretched by tuition bills, the new caps could prove daunting. With the annual cost of college running as high as $40,000 to $50,000 at some schools, the gap between what parents can now borrow through the program and what they actually owe could be substantial. Advocates warn that the change could put higher education further out of reach for those who need the most help.
Robin Squires of Stratford is among the parents now navigating the new landscape. She is helping her son, who will be a high school senior in the fall, decide where he will go to college and how the family will pay for it. She had originally planned to rely on a federal Parent PLUS loan to cover the cost, a route that has suddenly become far more limited.
"It can be very devastating for many people that actually cannot afford college but want it," Squires said, describing the stakes for families like hers. She speaks from experience on more than one front, as she herself works in higher education and sees the pressures that students and parents face up close.
Financial advisers say borrowers will need to look elsewhere to bridge any shortfall. Donald Kerr, the director of student lending for AAA Northeast, suggested families start considering options such as private student loans and even home equity loans. He noted that the borrowing rules remain unchanged for undergraduates taking out loans in their own name, but that the new squeeze falls heavily on parents.
For her part, Squires says the smartest move is the one her son has already made: completing college-level coursework before he even arrives on campus, so he can graduate faster and reduce the overall bill. With federal loans becoming tougher to obtain, families are increasingly looking for ways to cut costs and shorten both the time and the expense of earning a degree.