Filling the educational funding gap

Starting in July 2026, the One Big Beautiful Bill (OBBB) Act will begin reshaping the higher education financing landscape. The U.S. government will be taking a step back in federal student lending, meaning that millions of students and families will be turning to alternative funding options to support educational pursuits. For credit unions, this presents a unique opportunity to step in with competitive, member-focused lending options that align with your mission and strengthen member relationships.

Federal Parent PLUS loans—taken out in a parent’s name—have long been a popular option for those in need of additional funding to support their undergraduate student. PLUS loans currently can be used to cover up to the full amount of the student’s cost of attendance, minus other financial aid.

However, starting July 1, 2026, new Parent PLUS loans will have an annual borrowing cap of $20,000 per student, and a lifetime total of $65,000 per student. Considering the average cost of attending college in the United States now exceeds $38,000 per year, families who previously would have relied on PLUS loans will face substantial shortfalls.

While only about 4% of undergraduate parents use Parent PLUS, nearly 30% of current parent borrowers will max out the new annual cap, and 17% will hit the lifetime aggregate limit. 

Among the most significant changes to federal student loans under the OBBB is the phased elimination of the Grad PLUS program, used by graduate and professional students (such as doctors, lawyers, and veterinarians) to bridge educational funding gaps after they have exhausted other lower-cost sources. During the 2023–24 academic year, roughly 440,000 graduate and professional students borrowed $14 billion through the federal Grad PLUS program—nearly the size of the current private student loan market.

While federal Direct Unsubsidized loan limits for professional students will be increased as part of the OBBB, the move to end Grad PLUS will leave grad and professional students with fewer federal borrowing options.

Launching or expanding your student lending program now means your credit union’s solution will be ready well ahead of late spring and early summer, when families and students secure financing for the 2026-2027 academic year. Planning ahead is crucial to ensure your staff are familiar with your student loan program, and that your members are aware of it when they’re searching for funding solutions.

Consider the following timeline:

College award letters typically arrive, notifying students of their financial aid packages, including federal student loan options.

May 1^st is widely known as “College Decision Day,” when most high school seniors commit to their chosen college.

Peak in-school lending season begins. For Student Choice credit union lenders, nearly 85% of applications occur from June through August. 

The biggest changes to federal student loan programs go into effect on July 1, 2026. While existing borrowers will be phased into these new provisions, new borrowers will face the following:

College bills will be due, and students who have not secured funding may be unable to register for classes or move onto campus.

Student Choice can have your credit union’s lending program up and running in 30-45 days once the details are finalized—and credit unions that act now will be positioned to meet member needs first.

Contact us to learn more about how Student Choice can launch or help expand your student lending solutions ahead of the historic changes coming in 2026.