Students and Colleges Grapple With New Loan Limits

Twelve days out from the start of her senior year at Texas Christian University, Kaylee Webb was still waiting for a $19,000 Parent PLUS Loan that would help pay for tuition, fees, room and board at her dream school—as it had every semester so far. But the loan never came.

“I’d started sending emails to the financial aid office saying, ‘Hey, why does it not show up for the parent loan?’” but to no avail, recalled Webb, a computer information technology major. “By Aug. 13, I hadn’t heard anything. So I went to speak with them in person. They were just like, ‘Sorry, you’re not eligible.’”

This fall marks the first academic year since sweeping changes to federal student loans took effect in July, including a limit on the previously uncapped Parent and Grad PLUS loans. Webb and other existing borrowers didn’t think they would be affected because of a legacy provision outlined in the law, as well as the Education Department’s final rule, which was released in April. But then ED clarified its interpretation in early August.

“We thought we had everything under control with finances,” said Kaylee’s mom, Katrina Webb, a middle-class accountant who closely followed the evolution of the loan-limit rules.

A TCU official told them that based on that August clarification, legacy access was no longer calculated by the length of time a student was enrolled, but the number of credit hours they had completed. Since Kaylee had exceeded the minimum number of credits hours for her degree—120—she was no longer protected.

In a statement to Inside Higher Ed, the university said that while it never wants to see a family “negatively impacted,” the “subsequent administrative guidance and rulemaking from the Department of Education changed how loan eligibility is determined.” (ED has said the clarification didn’t represent a change in policy.)

Half of Kaylee’s credits came from an associate degree that she earned in high school in an effort to save money. Katrina said she was “devastated.”

“It really feels like someone’s stabbing you when you have a child that tried so hard to do all the right things to make her dream come true,” she said. “I’ve talked to several other parents, and all of their kids brought in transfer credits. These are all kids that tried to get ahead, and now they’re being punished. I don’t think that’s fair for any of us when we’re trying our best.”

But not all colleges see the department’s clarification, delivered via a webinar, as binding. And even groups like the National Association of Student Financial Aid Administrators say they can’t provide blanket advice and are encouraging institutions to consult with their own legal counsel.

Loyola Marymount University in Los Angeles told Inside Higher Ed that it would stick to the department’s final rule and base loan eligibility on years enrolled, not credit hours, as that is the “current written interpretation.”

“LMU is aware of the Department of Education’s discussion of a different interpretation during its August [webinar] and is awaiting formal written guidance from the Office of Federal Student Aid before making any changes to its financial aid policies,” a spokesperson said in an email.

That decision left Kathryn Cook, a business owner and student, without the Grad PLUS loan she needed to pay for the last of four years in LMU’s evening law program—though she expected ED’s clarification would help.

When the rule was first drafted, Cook was told she was in the clear. But that changed in July. The law school also has a more standard three-year J.D. program, and according to an updated notice from LMU, the department told colleges they must use “the full-time program length,” or, in this case, the shorter three-year program, to calculate a student’s remaining eligibility for unlimited loans.

Cook had already borrowed up to the new $257,500 lifetime limit—so further federal loans weren’t an option.

When she heard about the webinar’s change to credit hours, she thought she’d found a saving grace. But six weeks later, Cook still hasn’t heard a formal update from the Loyola aid office, though she did find out about their decision via the university’s statement to Inside Higher Ed. Her fall tuition is past due, and her account is on a registration hold for the spring semester.

“It’s becoming really stressful for me. Because I have a huge chunk of my budget missing,” Cook said. “At this point, I’m struggling to pay my rent. And my mom is trying to support me, but she’s a widow. She’s trying to retire. And I’m a first-generation student, so my mom doesn’t really have those resources.”

While the specifics vary, Webb and Cook are among thousands of students who are facing loss of eligibility, delays in getting federal funds or other challenges as financial aid offices across the country grapple with changes to the federal loan system.

The Education Department and colleges faced a tight timeline to roll out the new policies after they were passed in July 2025 as part of the One Big Beautiful Bill Act. As a result, experts say, financial aid offices have scrambled to interpret evolving guidelines, which have caused immense confusion among students and, in some cases, left families uncertain how they will pay for the remainder of their students’ degrees.

The Education Department said in a statement that it has provided and continues to provide “ample support to financial aid administrators,” including sessions at multiple financial aid conferences as well as published guidance, Q&As, webinars, office hours and podcasts.

“Not only did the Department implement these regulations on the July 1 statutory timeline, but we published the package two months in advance, providing additional time for schools to prepare,” said Ellen Keast, a department spokesperson.

‘Rules Change Along the Way’

At Saint Louis University, students and families have inundated the financial aid office with calls and emails, asking about the loan changes.

Alex DeLonis, assistant vice president of student financial services, said his office received 5,000 calls—the same call volume SLU experienced during the bungled launch of the new Free Application for Federal Student Aid in 2024. Emails, he said, followed a similar pattern.

“We thought FAFSA simplification might have been an anomaly … but to have two pieces of legislation that have completely flipped things upside down and we’ve had to implement so closely together—it’s just a lot,” DeLonis said. “It’s hard to predict and plan when the rules change along the way.”

SLU is providing stopgap solutions like supplemental and emergency grants and loans to help students whose loan access has been curtailed by the new rules. But not all colleges can do that, and even for those that can, it’s not a long-term solution. And students like Webb and Cook who’ve learned they no longer have access to PLUS loans aren’t the only ones experiencing confusion. Some still have access to PLUS loans for now but are confused about how much time they have left. Others are struggling to understand a proration provision, which ties how much a student can borrow to the number of credit hours they are taking. And then there’s the ongoing uncertainty over what counts as a professional degree.

On top of that, some financial aid offices had to manually update their software systems or make calculations by hand in order to carry out these changes, since the software providers themselves haven’t been able to catch up with ED’s guidance.

Combined, these obstacles have often delayed the disbursing of loans, even for those who are eligible.

“What we hear … is a general sense of anxiety that the rules are shifting faster than the financial aid system can keep up,” said Mike Pierce, executive director at Protect Borrowers, a student advocacy organization. “The student loan system and America’s higher education finance system are really not built to handle this kind of change.”

Karen McCarthy, vice president of federal relations at NASFAA, said the compounding challenges trace back to two root causes: the complexity of the bill and the time crunch the department had to implement it.

“What we are seeing now is the impact of not following that master calendar,” McCarthy said, referring to the department’s typical schedule of finalizing rules by Nov. 1 so that colleges have time to implement the changes the following academic year.

But Keast noted that an advisory committee signed off on a draft of the changes in November 2025. “If institutions waited until the final rule was issued to start preparing, that was their decision,” she said. (Financial aid administrators weren’t part of that committee.)

Feeling ‘Abandoned’

After a few weeks of uncertainty, Kaylee Webb’s plans for her senior year are back on track. Now, a full month into the fall term, she’s received her class ring and is planning for senior pictures.

“I’m still super ecstatic to be graduating from TCU,” she said. “Like I said, it’s the only place I wanted to go, and it’s the little things along the way that help lighten the mood.”

But for a little bit, she “didn’t know if I was going to be able to graduate. It was like my world was crashing down.” And even now, the solution isn’t ideal.

With the help of TCU financial aid, the Webbs found a private loan program run by the Texas Higher Education Coordinating Board called the College Access Loan. Kaylee had a part-time job and a strong enough credit score to qualify for the loan on her own; if that hadn’t worked out, her parents could have been co-signers.

“As a parent, I was trying to keep all the loans that I could out of Kaylee’s name,” Katrina said, adding that private loans don’t have the potential for loan forgiveness like the federal ones do.

Still, at the end of the day, her daughter will be able to graduate. She’s working hard to boost her résumé and hopes to secure a job that will pay off the debt.

Private loans aren’t an option for everyone, like Cook.

She’s trying to stay optimistic and search for other options, but if nothing changes she’ll have to take a leave of absence. She could still become a recognized attorney by finishing her studies under the California bar’s apprenticeship program, but she hopes she doesn’t have to go that route.

“I’d still be having to pay for a degree that I never got,” she said.

And while the Webbs and Cook said they can sympathize with the department and their financial aid offices, whose staffers had to operate on a short runway, they’re still frustrated by their circumstances.

“I feel really kind of abandoned, especially from the lack of communication. It’s worn me out,” Cook said. “It’s just so unjust. I feel like I need to continue telling people how it’s affecting me so they can fix it.”