By Rose Oswald Poels, WBA president and CEO
WBA recently participated in a roundtable hosted by Marquette University discussing recent changes to federal student loans, and ways to address a gap that will be left by new borrowing limits. Direct PLUS Loans are federal loans that eligible graduate or professional students and parents of dependent undergraduate students can use to help pay for college or career school. The loans can help pay for education expenses not covered by other financial aid.
Beginning July 1, 2026, graduate and professional students enrolling in a new course of study, enrolling in a new school, and/or taking out a Direct PLUS Loan for the first time for a program in which they’re enrolled, won’t be eligible for a Graduate PLUS Loan. Additionally, new annual and lifetime limits have been placed on Direct PLUS Loan eligibility for parents borrowing on behalf of their dependent children. Some students will be able to borrow under the previous rules for a limited amount of time, with restrictions.
Many graduate and professional students rely on Graduate PLUS Loans not just to pay school charges, but also to meet their basic needs while in school. Similarly, many parents seeking to support their children’s expenses rely on Direct PLUS Loans. In the absence of such loans, Marquette University expects heavy reliance on loans from the private market. Of concern is whether all who need assistance will be able to obtain it.
The Federal Reserve Bank of Philadelphia (2025) projects that at private nonprofit institutions like Marquette University, approximately 15% of private loan applications will be denied due to unfavorable or insufficient credit history. In addition, private loans do not come with the same protections as federal loans, and terms may be less favorable.
The roundtable discussed how to address this gap, and how to make financing education and supplemental needs, accessible for those who need it for their higher education. Some ideas explored include employer incentive programs, partnerships between lenders and educators, and the potential for a pooled investment. The purpose of the roundtable was to generate ideas and continue to think about ways to support access to financing student needs. To that extent, WBA is continuing to think about ways to bridge this gap, and I encourage you to do the same. The solution may be lending related, or it might be broader than that. As Wisconsin bankers, you work closely with your communities, students, and families. You have a valuable perspective that could generate ideas to address this issue, whether it’s something your institution can offer and participate in, or another idea.
If you would like to know more about this topic, or discuss or share any thoughts or ideas you have, I encourage you to reach out to us at wbalegal@wisbank.com.
