The U.S. Department of Education recently made changes to federal student loan programs for current and future borrowers. The goal is to simplify the student loan repayment system and curtail student loan debt, which stands at close to $2 trillion. Some changes went into effect July 1, 2026, while others will roll out over the next two years.
Prompted by Congress passing the One Big Beautiful Bill Act in 2025, these changes include:
- Loan limits that cap borrowing for graduate students, professional students and the parents of undergraduate students. All new borrowers will have a lifetime loan cap for combined undergrad, grad and professional programs.
- Fewer plan options for new federal student loans. Some current borrowers will have access to their original plan until 2028, and others will have 90 days after notification from their loan servicer to switch to a new plan, depending on the plan they have.
- Forbearance and unemployment deferment rules, effective July 1, 2027. People with loans taken out after that date will not be eligible for economic hardship or unemployment deferment, and payment pauses will be limited to up to nine months within any two-year period.
- Exclusion of borrowers, limiting the number of professions that qualify for Professional PLUS loans.
How will the changes affect your institution?
The federal student aid overhaul offers opportunities and challenges to colleges, universities, banks and credit unions. With fewer plans to choose from and more strict borrowing limits, the overhaul may negatively affect students’ choices and financial safety nets.
Luckily, your institution may be able to help! Top priority is clearly communicating to federal student loan borrowers that you’re here to support them, and you’ll need to show concrete ways you’re doing that. Stay in the know about your institution’s approach, policies and programs as they change over time. Offering empathy and accurate information goes a long way toward establishing loyalty and credibility.
You’ll find more tips for financial and educational institutions below:
Finance
- Provide financial insight for your student loan account holders. A blog on your website is a good place for this, and you can promote it with social media posts. Another option is a direct mail letter to explain what’s happening, say where more info can be found and offer a no-cost consultation with one of your loan officers.
- If you award scholarships, use your promotional materials to tout the benefits of applying given the recent student loan changes.
- Market Home Equity Lines of Credit (HELOCs) as flexible college funds. We’re already seeing this trend – it will likely continue.
- Advertise your high-yield savings accounts and CDs (and 529 plans if you offer them) as easy, safe ways to save for college. Also, encourage young people (and parents) to start saving early with youth savings accounts.
- Offer to provide individualized support and ensure that resources on your website are up to date with the latest changes. Assure student borrowers that your staff is aware of what’s happening, understands the stress it may cause many families and cares about their financial well-being.
Education
- Continue to encourage applicants to file for the Free Application for Federal Student Aid (FAFSA) and apply for as many institutional scholarships, grants and external scholarships as they’re eligible for. Paying for college and graduate school will likely become even more challenging for low-income students, and applicants who are the first in their family to go to college are less likely to be aware of all the helpful options available to them.
- Assert your institution’s unique value proposition. The debate surrounding the value of higher education may become more intense as potential borrowers contemplate the costs and benefits of two- and four-year programs. Clarify what an education means to your institution and how it can improve the lives of students.
- Understand that students will be more inclined than ever to consider costs before applying. Let that understanding guide your focus in marketing materials. You may want to promote statistics that show the financial benefits of earning a degree from your institution, like the average income for new graduates or the percent of graduates who quickly find a job in their field.
Not sure where to start? Don’t worry – image.works is here to help!
If you’re still wondering how to pivot with your marketing materials, reach out to an image.works representative. We work with financial and educational institutions across the country and can provide guidance on how best to reach and connect with your audience.
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