My sister-in-law called me on a Tuesday night sounding like someone had just told her a bridge was out. She'd gone to apply for the same Parent PLUS loan she'd used last year for my nephew's sophomore year, the one that covered the gap between his financial aid and his actual tuition bill, and the portal wouldn't let her borrow the full amount. There was a cap now. She hadn't heard a thing about it.

I hadn't either, not really. I knew Congress had passed a big overhaul of federal student loans last year, the kind of thing that shows up in a headline for a day and then disappears. I didn't know it would show up in her kitchen in October asking her to find $5,380 she didn't have a plan for.

what actually changed

The short version: loans first disbursed on or after July 1, 2026 play by new rules. The old menu of income-driven repayment plans, the ones with names like PAYE and ICR and the never-quite-finished SAVE plan, is being phased out for new borrowers. In its place there's one new repayment option, something called the Repayment Assistance Plan, plus the old standard ten-year plan.

Parent PLUS loans, which used to let a parent borrow up to the entire cost of attendance minus aid, now have an annual cap. I've seen the number quoted as somewhere around $20,000 a year, but I want to be honest that I'm not fully certain that figure is right for every school or every year of enrollment, and the fine print on aggregate limits gets complicated fast. If you're in my sister-in-law's position, the number on your own portal is the only one that matters, not the one in some blog post.

Grad PLUS loans are gone entirely for anyone starting a graduate program after that July date. Graduate borrowing now runs through regular unsubsidized loans with their own yearly and lifetime caps.

why this blindsided her

She'd budgeted around last year's number. That's the whole problem. Nobody mailed her a letter in June saying "by the way, the thing you did in August is going to work differently in October." She found out the way most people find out about anything from the government now, by hitting a wall in a form and then googling why.

I went and checked Aidvantage, her loan servicer, myself while she was still on the phone, mostly to have something to do with my hands. The FAQ page was better than I expected, actually, but it was written for someone who already knew the old system existed and had changed, not for someone finding out live.

what we did instead

We didn't solve it that night. What we did was make a list, because a list is a thing you can hold onto when a phone call has rattled you.

• Call the school's financial aid office directly and ask if there's emergency or bridge funding for the gap, not just loans
• Look at whether my nephew qualifies for any additional subsidized or unsubsidized federal loan room in his own name before touching private lenders
• Get an actual quote from a private parent loan through a credit union, not just whatever the first search result shows, since rates on those vary more than people expect
• Ask the school for a short payment plan to split the remaining balance over the semester instead of one lump sum

She ended up doing a mix of the second and fourth. My nephew picked up another $2,310 of loan room in his own name, which sounds worse than it is when you're twenty and not yet supporting anyone, and the bursar's office let her split the rest into four payments. It's not elegant. It's what was available in the two weeks she had.

the part that actually bugs me

My sister-in-law is not a careless person. She reads her mail, she checks her accounts, she asked good questions when my nephew first picked a school. The rules just moved underneath a system she'd already built a plan around, and the people who moved them didn't seem to think telling current borrowers was part of the job.

If you have a kid in college right now, or you're about to, I'd check your loan limits before the bill is due, not after. The Department of Education's site and your servicer's portal both have the current numbers, and they're more reliable than my memory of a headline from last year. Ask specifically whether your plan year's disbursement counts as "before" or "after" July 1, 2026, because that date is doing a lot of work in how this applies to you.

I keep thinking about how much of personal finance right now isn't about bad decisions. It's about good plans built on rules that quietly stopped being true.