Author: Paul Martin

What is the Parent PLUS Loan?

The Parent PLUS Loan is offered by the Department of Education to parents borrowing for a student’s undergraduate education.

The qualification threshold for the Parent PLUS Loan is lower than for private loans. Private loans offers are based on a borrower’s credit score or debt-to-income ratio. Parent PLUS Loans only require that the borrower not have an adverse credit history, such as a bankruptcy in the last 7 years or a 90-day default on current debt.

For more information about the Parent PLUS Loan, including current interest rates, check out the Department of Education’s resources.

What’s changing?

Borrowing limits have new caps, repayment plan is limited to the Standard Repayment option and Parent PLUS Loan will no longer qualify for federal loan forgiveness programs.

When do changes take place?

On July 1, 2026, these changes will impact Parent PLUS loans for Award Year 2026-27 and beyond. Parents borrowing for the first time after this date will be subject to these new terms. Parent PLUS Loans disbursed before July 1, 2026 remain subject to the current terms.

Building affordability with college merit aid

When a student isn’t eligible for need-based financial aid, merit scholarships awarded by a college can be a significant way to reduce costs and build affordability. Merit scholarships are awarded primarily through the admissions process as an incentive for students to enroll, with no criteria around need.

How to measure a college’s merit generosity

There are two ways to understand a college’s generosity with merit aid: 1) the number of students receiving merit scholarships and 2) the size of these awards.

The number of awards

Colleges vary widely in how many merit scholarships they give out, with colleges that offer no merit scholarships on one end and colleges that award every admit a merit discount.

The DATA: Colleges publish the percentage of students who do not qualify for need-based aid and still receive a merit scholarship. This can be found in the column % Receiving Merit Awards.

A student seeking merit aid can understand that the chances of receiving a scholarship from Boston College (3%) are highly unlikely, from Northeastern (41%) are possible, and from Fairfield (92%) are certainly guaranteed.

The size of the award

It’s critical to understand the amount of the scholarship that a college may offer to ensure that it’s enough to make the Net Price affordable.

THE DATA: Colleges publish the average merit scholarship received by non-need students. This can be found in the column Ave Merit Award. It’s also helpful to understand what percentage of the cost of attendance the average merit scholarship covers. This can be found in the column % Merit to COA.

While a student admitted to both DePauw and Denison would reliably receive a merit scholarship in the admissions process, there is a significant difference in the award amount. DePauw’s average scholarship of $37,448 covers nearly 50% of the cost of attendance, whereas Denison’s average scholarship of $19,426 covers just above 20%.

College Data from the 2024-25 Common Data Set

Use this online database to explore colleges’ generosity with merit-based aid.

Tips:

• FILTER: When using the Filter for Region or State column, choose the is any of option to select multiple Regions or States.
• INFO ICON: The info icon next to the column name provides a more detailed description of the data presented.
• DOWNLOAD: To download a copy, click on the 3 dots and select Export to CSV. It will save the file with any changes you’ve made. Note: I don’t recommend downloading to Excel, because it will convert the number fields, like percents and dollars, to text fields.

Not every college can meet your student’s need.

In fact, only 70 out of the 460+ colleges on the list below meet 100% of need or aid eligibility.

Why do colleges gap financial aid?

There are two key reasons why a college’s financial aid offer may not match or equal your student’s aid eligibility.

Most colleges don’t have enough resources.

Most colleges provide an award that is only a percentage of the student’s eligibility, resulting in a gap in the financial aid offer.

The DATA: Colleges publish the percentage of need or eligibility they meet on average, which can be found in the data below in the column % of Need Met.

If a student were eligible for $30,000 in need-based financial aid at both Babson and Emerson, the student would expect to receive nearly $30,000 from Babson (at 96%), but only about $15,000 from Emerson (at 56%).

Public universities only fund their resident students.

Public universities only award institutional need-based financial aid to their in-state, resident students. Out-of-state students admitted should expect to receive no institutional need-based aid, resulting in a huge aid gap.

THE DATA: You should assume 0 % of Need Met, except for federal aid options. The numbers reported for public universities below reflect the percentage of need met for their in-state, resident students

A student from Maryland admitted to U Mass Amherst would not have 88% of their need met. They would pay full Out-of-state Cost at nearly $60,000, except for any merit scholarships or federal aid.

College Data from the 2024-25 Common Data Set

Use this online database to explore colleges’ generosity with need-based financial aid.

Tips:

• FILTER: When using the Filter for Region or State column, choose the is any of option to select multiple Regions or States.
• INFO ICON: The info icon next to the column name provides a more detailed description of the data presented.
• DOWNLOAD: To download a copy, click on the 3 dots and select Export to CSV. It will save the file with any changes you’ve made. Note: I don’t recommend downloading to Excel, because it will convert the number fields, like percents and dollars, to text fields.

These resources are offered to support families with college-bound students in the Los Angeles area affected by the January 2025 wildfires. College financial aid offices want to understand changes in your financial circumstances as a result of this natural disaster to comprehensively evaluate your financial need and award need-based aid.

Through a financial aid appeal, you can submit new information about the financial impact of this event to supplement and amend the information submitted on the FAFSA or CSS Profile. Through a process known as Professional Judgment, the college financial aid office will include new factors like reduction in income, extraordinary expenses, and loss of assets in their evaluation or re-evaluation of your financial aid eligibility and award.

It’s important to advocate for these changes and engage in this process early. Start with these resources and work with your college counselor for support. Reach out to the financial aid offices; they are there to help.

Financial Aid Appeal Letter Template

Use this appeal letter as a template for requesting an adjustment to financial aid.  Edit language to best reflect your personal circumstances. The italicized sections are prompts for writing.

Q&A

These are the questions asked by families during our workshop, along with answers and guidance provided.

How is Pell Grant eligbility determined?

Maximum Pell Grant

The FAFSA determines whether the student qualifies for the Maximum Pell Grant based on two factors: 1) parents’ Adjusted Gross Income (AGI) plus Foreign Income Exclusion Amount in the base year, family size and state of residence, and 2) the student’s calculated Student Aid Index (SAI). When a parent’s AGI plus Foreign Income Exclusion Amount is at or below limits based on marital status and family size in the tables below, the student may qualify for the Maximum Pell Grant. The Maximum Pell Grant is determined annually by Congress, and the amount for the 2026-27 Award Year is expected to be $7,395.

Starting with 2026-27 FAFSA, all students will receive a calculated Student Aid Index (SAI). If the Student Aid Index (SAI) is more than twice the Maximum Pell Grant amount for 2026-27 – or $14,790 – then the student will not be eligible to receive the Pell Grant even though the parents’ AGI plus Foreign Income Exclusion Amount is at or below the amount in the table below.

Partial Pell Grant

A student can still receive a partial Pell Grant when their parents’ AGI plus Foreign Income Exclusion Amount exceeds the limits below. This partial Pell Grant is calculated based on the Student Aid Index (SAI). When the SAI is less than the Maximum Pell Grant, the student may be awarded the difference between the two.

Maximum Pell Grant Income Limits

This table provides the parent income limits for a dependent student for the three FAFSA cycles: 2025-26 FAFSA, 2026-2027 FAFSA, and 2027-28 FAFSA.

The rules on what Parent Income is included when calculating your Student Aid Index – or ability to pay for college – differ from FAFSA and CSS Profile.

FAFSA : a more limited accounting of income

The FAFSA only takes income from certain lines of a parent’s personal tax return. The personal tax return for FAFSA purposes is the 1040 and includes Schedule 1, Schedule 3, and Schedule C. For a detailed look at which amounts are included, check out this resource from Federal Student Aid with screenshots from the 2023 tax return. Overall, this limits the total income included.

CSS Profile : a broader accounting of income

The CSS Profile uses this same income as a starting point but adds additional untaxed income. The CSS Profile requires parents to submit additional income documents beyond the 1040, including W-2s, 1099s, and all business tax returns. What is the untaxed income that the CSS Profile includes? They can vary depending on a parent’s sources of income and form of employment, e.g. working for an employer or self-employed. Here are the most common examples:

• Pre-tax contributions to an employer retirement account, like a 401k, 403b, or pension.
• Pre-tax contributions to an HSA.
• For business owners, certain business deductions are allowed by the IRS but not considered outgoing expenses exclusively for business purposes, like the home office deduction or business expense of a personal car.
• For property owners, depreciation of the property is allowed by the IRS to offset rental income but is not allowed by CSS Profile for financial aid eligibility.

In each of these cases, these amounts are added back to the taxable income to calculate the income used in the financial aid evaluation. The result can be that a larger amount of income is included for evaluating need-based financial aid through the CSS Profile versus the FAFSA.

Parent Income Included in the FAFSA and CSS Profile

This table summarizes the income included in each application.

The rules for which Parent Assets are counted in calculating your Student Aid Index – or ability to pay for college – differ from FAFSA and CSS Profile. While there are assets in common, there are exceptions. This chart summarizes which Parent Assets are counted and which are protected.

Impact of Parent Assets on the Student Aid Index

When an asset is counted, the reported amount contributes roughly 5% toward your Student Aid Index. Protected Assets have zero impact on your Student Aid Index. No counted asset is weighted more than another, like a 529 or College Savings Plan. College Savings Plans also contribute 5%.