New Student Loan Limits May Force More Borrowers Toward Private Financing
Federal student loan caps under the "One Big, Beautiful Bill" will tighten borrowing options for college students starting in the 2026-27 academic year. The legislation reduces access to government-backed loans, pushing many toward riskier private alternatives—particularly medical students and Parent PLUS borrowers, who face gaps of tens of thousands in funding.
Private loans lack federal safeguards like income-driven repayment or forgiveness programs. Complaints against private servicers outpace those for federal counterparts, while higher interest rates could add nearly $5,000 to repayment burdens. The shift underscores a broader trend of financialization in education, where gaps in public support are increasingly filled by costlier private capital.
