The 2027-28 FAFSA Is Open, but the Loan Limits Behind It Changed. Here Is the New Math for Families

The form itself will feel familiar. The math after it will not, especially for parents.

What happened

The 2027-28 FAFSA became available to everyone by October 1, 2026. It uses your 2025 tax return, and the federal deadline is June 30, 2028. Treat that date as a formality. States and colleges set their own deadlines, many of them in January through March, and some state grant money is awarded first come, first served until it runs out. Filing this fall is the safe play.

The bigger change took effect on July 1, 2026, under last year's reconciliation law:

• Parent PLUS loans are capped for the first time. A parent can now borrow at most $20,000 a year, and $65,000 total, for each dependent student, no matter how many parents borrow. Before July, a parent could borrow up to the full cost of attendance minus other aid, with no dollar cap.
• Grad PLUS is gone for new borrowers. Graduate students are limited to $20,500 a year and $100,000 total in Direct Unsubsidized Loans ($50,000 a year and $200,000 total for professional programs such as medicine and law).
• A lifetime ceiling now applies. Federal student borrowing is capped at $257,500 across undergraduate and graduate school combined.
• Undergraduate limits for students did not change. A dependent student can still borrow $5,500 in the first year, $6,500 in the second, and $7,500 in each year after that.
• One exception protects current students. Families who borrowed for the same program before July 1, 2026 generally keep the old rules for a limited window of up to three academic years.

The prices on this year's loans are also set. Loans first paid out between July 1, 2026 and June 30, 2027 carry a fixed rate of 6.52% for undergraduates, 8.07% for graduate students, and 9.07% for Parent PLUS. On top of the rate, the government keeps a fee from every payment: 1.057% on student loans and 4.228% on PLUS loans. A rate is fixed for the life of that loan, so each year's borrowing is its own loan at that year's price.

For scale, the College Board puts the average total student budget for 2025-26 at $30,990 a year for in-state students at public four-year colleges and $65,470 at private nonprofit colleges. Those budgets include housing, food, books, and travel, not just tuition. Grant aid cuts them down for most families; the maximum Pell Grant alone is $7,395. But whatever is left after grants is where the new caps start to bite.

What it means in dollars

One year of Parent PLUS at the new cap. Borrow the full $20,000 at 9.07% and repay it over the standard 10 years, and the payment is $254.11 a month. The total repaid is $30,493.18, so the year of borrowing costs $10,493.18 in interest. The fee quietly makes it worse: 4.228% comes out before the money reaches the school, so a $20,000 loan delivers $19,154.40 toward the bill. You owe $20,000 and receive $19,154.40.

Compare the same $20,000 in the student's own name at 6.52%. The payment is $227.30 a month and the total is $27,275.94, which is $3,217.24 less than the parent loan. The student's fee is smaller too, 1.057%, so the student loan delivers $19,788.60 of its $20,000. This is why aid offices tell families to use the student's federal loans first: for a freshman, $5,500 at 6.52% costs $62.51 a month over 10 years. Parent borrowing is the most expensive federal money on the table, and it is now the most limited as well.

The four year cap trap. The $65,000 lifetime cap has a pacing problem built into it. Borrow the $20,000 maximum in each of the first three years and you have used $60,000, which leaves just $5,000 of Parent PLUS room for senior year, exactly when a family that has been borrowing all along is least able to pay cash. Borrowed evenly instead, $16,250 a year reaches the same $65,000 with no senior year cliff. And know what the full cap costs: $65,000 at 9.07% repaid over 10 years is $825.86 a month and $99,102.84 in total, of which $34,102.84 is interest. These repayment figures treat the amount shown as the balance when repayment starts; interest that builds up while your student is in school would add to them.

Where the cap actually binds. Take the College Board's average private nonprofit budget, $65,470 for one year. A junior or senior can borrow $7,500 in their own name, and a parent can add the $20,000 PLUS maximum. That is $27,500 of federal loans against a $65,470 budget, leaving $37,970 to come from grants, scholarships, savings, work, or private borrowing in that single year, before any aid is counted. Run the same test at an average in-state public college, with a $30,990 budget and a freshman's $5,500 loan: $25,500 of federal borrowing leaves $5,490. The cap is a minor constraint at a public in-state price and a central planning fact at a private one. The college list itself is now a borrowing decision.

Run your own numbers

Before you fall in love with a school, price the debt, not just the degree. Put your expected borrowing into our student loan payoff calculator and look at the monthly payment and the total interest at 6.52% for student loans and 9.07% for parent loans. Then work out what the full degree costs, year by year, with the degree cost calculator, and compare schools on what you would actually pay after grants with the net price estimator. Ten minutes with those three numbers tells you whether the $20,000 cap is a footnote in your plan or the wall it runs into.

Key takeaways

The window: the 2027-28 FAFSA opened by October 1, 2026, uses your 2025 tax return, and state and college deadlines land far earlier than the June 30, 2028 federal deadline. The caps: Parent PLUS is limited to $20,000 a year and $65,000 total per student, Grad PLUS is gone for new borrowers, and a $257,500 lifetime ceiling applies to all federal student borrowing. The prices: 2026-27 loans carry fixed rates of 6.52% for undergraduates, 8.07% for graduate students and 9.07% for Parent PLUS, plus fees of 1.057% on student loans and 4.228% on PLUS loans. The trap: borrowing the $20,000 maximum three years in a row leaves only $5,000 of PLUS room for senior year; $16,250 a year paces the same $65,000 evenly. The move: file early, exhaust grant aid and the student's cheaper federal loans first, and price the full degree's debt before choosing the school.