COLLEGE PLANNING
the same time, new caps on Parent PLUS loans—$ 20,000 annually and $ 65,000 in aggregate per child— limit how much families can borrow to fill that gap.
That combination is forcing more families to confront a reality that advisors say has long been deferred.“ The most dangerous words in college planning are,‘ If you get in, we’ ll figure it out,’” Messinger says.
In practice, that promise is now becoming even harder to keep. Messinger describes working with a family whose child received a significant scholarship but
could be severe, including default, wage garnishment, and long-term damage to credit.“ And that trickles down to other parts of their finances,” Mayotte says.
However, that consolidation can offer some value to clients if it’ s handled the right way, Kantrowitz says.
“ If the child has two parents, then one could borrow the new Parent PLUS loans, and the other sticks with the grandfathered and old Parent PLUS loans, and then nothing resets,” he says.“ But it’ s another complexity that they have to deal with that they your loan balance is going to be a lot greater than your income, you really have to sit there and think:‘ Is this a good return on investment?’” McGuire says.
That shift is already influencing behavior. Advisors report more students considering community college, gap years, or in-state options to reduce costs before committing to a four-year private institution.
McGuire says she’ s“ been seeing a lot more people taking gap years” as students seek to test career paths before taking on large amounts of debt.
In addition, Mayotte says, many students switch majors and even schools in pursuit of their four-year degree.“ It can be a really smart thing to have the student go to a community college or lower price school for the first two years, and then transfer into their dream school,” she says.“ The first two years of credits are going to be the same for most degrees.”
For high-income student loan borrowers, the strategy may increasingly be straightforward: to pay down debt aggressively or refinance into private loans where appropriate.
still faced a funding gap that could not be bridged under the new borrowing limits. Without sufficient financing, the student risked being unable to complete the final year of a four-year degree.
“ That finish line is not a happy one,” he says. Beyond the structural changes, experts warn that the transition itself is creating confusion— and, in some cases, costly mistakes.
Mayotte says many borrowers are unaware of critical deadlines and nuances, such as the need to consolidate existing Parent PLUS loans before July 1 to preserve access to income-based repayment caps.
“ There hasn’ t been nearly enough communication about that,” she says.“ They’ re going to find out the hard way.”
For some families, the consequences might not approach correctly. And once they do it wrong, then they lose that lower payment and public service loan forgiveness eligibility.”
The Continued Shift Toward ROI Thinking
Taken together, the changes are pushing both advisors and clients toward a more explicit focus on return on investment.
For high-income student loan borrowers, the strategy may increasingly be straightforward: to pay down debt aggressively or refinance into private loans where appropriate. For lower-income borrowers, income-based repayment still offers some protection.
But for the large middle segment, the decisions are becoming more binary.“ If
What It Means For Advisors
For financial advisors, the implications of the federal changes are twofold.
First, college planning should be discussed earlier in their client relationships. Advisors can no longer rely on repayment strategies to mitigate poor borrowing decisions made years earlier. Instead, they must help clients assess affordability up front and align expectations before enrollment decisions are made.
Second, the advice itself will change. As clients face fewer repayment options and are less able to improve outcomes after the fact, the advisor will be doing more scenario analysis— offering behavioral guidance and risk management— and not just technical maneuvering.
“ We’ re doing the numbers with our clients, so they see what repayment is going to look like one way or the other,” McGuire says.“ For people who are borrowing after July 1 for the first time, the changes will make things simpler. But for the folks who already have loans, it has made their life a lot more complicated.”
32 | FINANCIAL ADVISOR MAGAZINE | MAY / JUNE 2026 WWW. FA-MAG. COM