Paying for college could soon get tougher for many Indiana families as new federal student loan rules take effect July 1.

Parent PLUS loans will be capped at $20,000 a year and $65,000 total. Some graduate students will also lose access to certain federal loans.

Bill Wozniak vice president of the Indiana nonprofit InvestED, said Hoosier families are just now realizing how expensive borrowing has become.

“This is actually the second highest PLUS loan rate ever,” Wozniak said. “Two years ago was actually just a smidge higher, but this is close to being tied for the most expensive PLUS loan ever.”

Supporters say the changes could help prevent families from taking on too much debt. Critics worry some families may not have enough help to cover rising college costs.

Wozniak said families should look for scholarships, grants and other aid before taking out bigger loans. He also said families should compare rates and fees carefully before borrowing money.

Some loans may cost less than current federal Parent PLUS loans, which now top 9% — plus fees.

“That’s not some wonderful really low rate, so we want people to think about that as well,” Wozniak said. “And now with the caps coming in, that’s just another reason to do even more due diligence and do your research to find out what else may be available that might be a better choice.”

Federal officials say the new rules could reduce borrowing and lower financial risk. Some college groups warn the tighter loan limits could leave middle-income families with fewer options.

Source: Public News Service