Paying For Education-How it's Changing and What You Can Do About It

As the oldest of four siblings, I’ve had a front-row seat to the rising cost of higher education.

Today, my siblings are all at different stages of education, all attending different schools. One brother recently earned his master’s degree and another brother is graduating this spring. My sister is finishing her freshman year. When we’re all home, it’s a chaotic mix of us all cheering for our own schools. To make us all happy, our parents fly all the school flags from their back porch. During a recent visit home, looking at those flags, I was struck by the impact that these colleges have had on our lives and the incredible complexity and cost of paying for higher education.

With the passage of the One Big Beautiful Bill Act in 2025, the student loan system saw some of the most significant updates in years. If you’re thinking about paying for college or working to pay off student loans, here are a few things to know.

Borrowing Is Changing

• Parents will no longer be able to take out unlimited loans to cover college costs. Parent PLUS loans now have a per-student annual limit of $20,000 with a total lifetime cap of $65,000 per student.
• Graduate students also face reduced borrowing options. Graduate plus loans have been eliminated. Now, the only option for graduate loans will be direct unsubsidized loans
• A new lifetime federal borrowing limit of $257,600 has been introduced (excluding Parent PLUS).

Repayment Is Being Simplified

Repayment options are shrinking from the several payment options available today to two repayment plans. Loans taken out after July 1, 2026, will have two repayment options.

• A standard repayment plan based on the size of the loan, or

• A new income-based option that will replace current plans over the next few years called the Repayment Assistance Plan (RAP)
• For families utilizing PLUS loans, income-based repayment options will no longer be available after July 1, 2026. All new parent Plus loans will only be eligible for standard repayment.

Watching my siblings move through different stages of college has reminded me that education is both meaningful and expensive. It is not just a tuition bill. It is a long-term financial decision that can shape a family’s balance sheet for decades.

With borrowing limits changing and repayment options narrowing, the margin for error is smaller than it used to be. A rushed decision today can create tax issues, limit flexibility, or add pressure later. Education funding should be coordinated with your broader retirement, tax, and investment strategy—not handled in isolation.

If you are preparing for college expenses, now is the time to review your plan. We help families evaluate these decisions within the context of their full financial picture. Schedule a conversation with our team today to discuss in more detail.

Thomas Beahn, CFP® is an Advisor with Rather & Kittrell.  He is available at [email protected].