Financial Matters: Staying Smart in Uncertain Times

College planning is always challenging, but in 2025, things feel especially unpredictable. Costs are rising, financial aid systems are evolving, and many uncertainties remain. It can feel overwhelming for families trying to find the right school for their student—both academically and financially.

When approaching college planning, it's essential to think of college as both a consumer purchase and an investment, not just a dream. Families need to plan wisely by figuring out their budget before shopping for college. Running Net Price Calculators before visiting campuses can provide helpful directional data points. Taking out huge loans in the first year is unlikely to be the best path for most families.

If funding is a concern, consider alternative pathways such as:

• Community college

• Online programs

• Employer-sponsored options (e.g., Starbucks)

💰 Major Federal Loan Changes Coming in 2026

The passing of the Congressional spending bill in July 2025 will have a major impact on college funding for years to come. Beginning July 1, 2026, the federal government will significantly limit how much parents can borrow for their children’s education.

The new Parent PLUS loan limits are:

• $20,000 per year

• $65,000 total per child

This ends the previous practice of allowing borrowing up to the full cost of attendance. In addition to new caps, the law also consolidates several repayment options into just two.

If loans will be needed, work now on improving credit scores—for both parents and students. Private loans depend heavily on creditworthiness, so early preparation matters. Keep loans minimal in the early college years, and remember: under the new law, Parent PLUS loans will not be eligible for income-driven repayment plans.

🧾 Rethinking Repayment and Managing Expectations

Understanding the new federal loan landscape is vital. The changes taking effect July 1, 2026, represent the most significant overhaul of federal student lending in decades.

Families should not count on loan forgiveness programs. Instead, plan as though loans will be repaid in full. Paying interest during college can help reduce total repayment costs. It's essential to:

• Research the two new repayment options

• Keep detailed records of all loan payments and scholarship offers

🎓 Merit Aid & the Financial Aid Timeline

Merit-based aid is often awarded by moderately and less selective colleges that use scholarships to attract strong students. In contrast, highly selective colleges typically do not offer merit aid and reserve aid for students with demonstrated financial need. When merit aid is available, it’s often competitive.

Expect delays from overwhelmed financial aid offices. Submit FAFSA and CSS Profile forms accurately and as early as possible. Be patient with college staff, who are also navigating the ripple effects of federal system changes and staffing shortages.

🔍 Do Your Homework—and Plan Beyond Year One

Thorough research is key. Families should look beyond just the first-year cost of attendance. Be sure to evaluate:

• Housing costs after freshman year

• Hidden or lifestyle-related expenses (e.g., Greek life, social events)

• Program-specific costs like lab fees or study abroad requirements

Stay current with policy changes. Remain flexible. Most importantly, don’t let college rankings drive your decision-making.

✅ Final Takeaway: Plan Early, Plan Realistically

Early planning and research are essential to finding an affordable path to college in this new era. While the challenges are significant, families who approach the process thoughtfully and realistically can still find excellent educational opportunities that fit their financial circumstances.

The new borrowing limits may feel restrictive at first—but they may ultimately help families avoid unsustainable debt that could burden them for decades.

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Garrett Educational Consulting provides comprehensive counseling for college and boarding school admissions as well as academic advisement. Click HERE to learn about our services.

Prepared especially for our clients and their families The information included in this newsletter is generic and assumes no liability for loss or damage due to reliance on the material contained herein. Copyright © 2025 by The College Advisor, Inc. All rights reserved.