Education Planning for High-Net-Worth Families in a Changing Student Loan Landscape

Whether it is a student heading off to college for the first time, a parent or grandparent wanting to create opportunity for the next generation, or an individual returning to school to build a better future, education has long been viewed as an investment worth making. Higher education is meant to open doors without closing off the possibility of future financial success. 

But starting this summer, that path may be harder to navigate. Tuition costs are up, loan rules are changing, and some of the borrowing options people once relied on are becoming ancient history. In other words, the traditional playbook for funding college and graduate school is being turned upside down. 

We are in the midst of one of the largest federal student loan overhauls in decades. Individuals and families funding higher education are now tasked not only with answering the question of how to pay for school, but also with financing a degree in a way that supports an individual's long-term financial wellness, rather than creating financial pressure that lasts for years. 

Student Loan Lending Rule Changes 

Beginning July 1, 2026, federal student loan lending rules will change most significantly for post-undergraduate students and parents. Graduate students, professional students, and parents using Parent PLUS loans will face tighter caps and fewer repayment options. For years, graduate and professional students could often borrow up to the full cost of attendance through a mix of Direct Unsubsidized Loans and Grad PLUS. That open-ended federal backstop is disappearing for new borrowers.  

Lending Limit Changes 

Updated lending limits are expected to hit students and families enrolling in high-cost graduate or professional programs without sufficient liquid assets or cash flow to cover the gap the hardest. Households relying on federal loans will need to fill whatever gap remains with work-study, scholarships, investment assets, current cash flows, or private loans.  

Graduate vs. Professional Degrees 

Additionally, not all post-undergraduate programs will be treated the same. Under the new framework, borrowers fall into either the “graduate” or “professional” category, and the difference in the amount of federal dollars offered is profound. 

The distinction matters because some programs that families consider “professional” may not be eligible for the higher borrowing limits. The public has already raised concerns that certain nursing and public health programs could end up in the lower “graduate” category. This categorization would sharply reduce federal borrowing capacity for students in those fields. 

Impact on Public Service Loan Forgiveness 

While the Public Service Loan Forgiveness (PSLF) program is not changing directly, the lending limits may still impact these borrowers. PSLF creates a clear pathway for federal student loans to be forgiven, income tax-free, after a series of eligibility requirements are met.  

If the cost of school attendance exceeds the federal lending caps, students will be forced to seek alternative funding options. Private loans are likely to fill in the gap of alternative funding, but they are not included in forgiveness using PSLF. That could mean more financial strain from higher loan payments over the long term.  

Federal Loan Repayment Option Changes 

Changes to borrowing limits are only half the story. The repayment landscape is also getting tighter. Current borrowers will have fewer income-driven options to choose from. And, for loans first disbursed after July 1, 2026, the menu gets even smaller.  

New borrowers will generally have just two options: a new standard plan and one income-driven option, the Repayment Assistance Plan (RAP). The new RAP plan generally means higher monthly payments and a longer path to full repayment than previous plans offered. 

New Standard Plan Repayments 

The new standard plan stretches repayment based on the total amount borrowed. 

RAP Repayments 

RAP annual repayments are based on the borrower’s adjusted gross income (AGI). If the payment doesn’t cover that month’s accrued interest, the difference is waived. The borrower needs to recertify their annual income each year, so the repayment amount may change. 

While payments are reduced for borrowers with dependents (a whopping $50/month per dependent), experts predict that overall, the repayment amounts will be much larger than previous income-driven plan offerings.  

While RAP will still maintain the same rules for PSLF, it will increase the term for the Income Driven Repayment Plan forgiveness from 20 or 25 years to 30 years. That is a major trade-off for borrowers who had been counting on shorter forgiveness terms under older income-driven plans.  

How To Plan for Student Loan Changes 

For high-income earners and higher-net-worth families planning to support a student’s higher education, the question isn’t just how to pay for college. The real questions are which assets should be used, when, and in what way that best supports the family’s larger tax, estate, and legacy planning goals. 

While the scope of maximizing financial aid and benefits is beyond the scope of this article, higher-net-worth families have a few options.  Vehicles such as 529 plans, Roth IRAs, taxable investment accounts, and dynasty trusts may be used to supplement the cost of education beyond what financial aid provides. Each may play a role, but each comes with different trade-offs. 

529 College Savings Plans 

529 college savings plans are often a strong starting point. They offer tax-deferred growth, tax-free withdrawals for qualified education expenses, relatively high contribution limits, and flexibility if the beneficiary needs to change. In some states, contributions may also provide a state income tax deduction. Unused portions of 529 plans can also be converted into Roth IRAs if certain requirements are met. 

Roth IRAs 

Roth IRAs may offer flexibility in certain situations. High earners may not qualify for direct contributions, but planning opportunities may exist in some cases. Roth funds can be used for qualified education expenses without an early withdrawal penalty, and the account itself is not counted as an asset for financial aid purposes. 

Taxable Investment Accounts 

Taxable investment accounts may be a useful backup or gap filler once other options have been exhausted. They give families flexibility; however, gains, income, and tax efficiency need to be managed carefully. 

Dynasty Trusts 

For families with significant wealth, dynasty trusts can support both education funding and long-term wealth transfer goals. They may fit well into the broader estate and legacy planning strategy. 

For these families, education funding should be coordinated with the rest of the plan, including taxes, cash flow, retirement goals, estate planning, and gifting strategies. 

The most optimal approach is rarely just about choosing an account. It is about making sure the strategy supports the family’s broader goals, not just the next tuition bill.  

Final Thoughts on Student Loan Changes 

Taken together, these changes make one thing clear: paying for education is no longer just about finding the money. It is about understanding the rules, weighing the trade-offs, and making decisions that fit into the rest of your financial life.  

From savings strategies to borrowing limits to repayment options, each piece may impact cash flow, taxes, and long-term goals. This is one area where it pays to not go it alone. Working with a qualified financial professional can help families cut through the complexity and build a plan that supports both education funding and the bigger picture. 

Navigating the complexities of education funding alongside your broader financial goals requires a strategic approach. Our team of experienced advisors can help you evaluate your options, from 529 plans to dynasty trusts, helping your education strategy align with your long-term wealth objectives. Contact us today to discuss how the upcoming student loan changes may impact your family's financial plan. 

 FAQs About Student Loan Changes 

1. What are the key student loan changes happening in 2026? 

Beginning July 1, 2026, federal student loan rules will change significantly. Graduate students, professional students, and parents using Parent PLUS loans will face tighter borrowing caps. Additionally, new borrowers will have fewer income-driven repayment options, primarily limited to a new standard plan and the Repayment Assistance Plan (RAP). 

2. How do the 2026 student loan changes affect high-net-worth families? 

High-net-worth families can no longer rely on open-ended federal borrowing to cover the full cost of graduate or professional degrees. They must strategically utilize assets like 529 plans, Roth IRAs, taxable accounts, or dynasty trusts to fill funding gaps while balancing broader tax and estate planning goals. 

3. What is the Repayment Assistance Plan (RAP)? 

The Repayment Assistance Plan (RAP) is the primary income-driven repayment option for new federal student loans disbursed after July 1, 2026. RAP bases annual repayments on adjusted gross income and waives unpaid accrued interest. However, it generally requires higher monthly payments and extends the forgiveness timeline to 30 years. 

This communication is for informational purposes only. The content does not purport to present a complete picture, but Focus Partners believes the information is representative of issues and needs facing some clients. This should not be construed as specific investment, tax, or legal advice. Individuals should seek advice from their wealth advisor or other advisors before undertaking actions in response to the matters discussed. No client or prospective should assume the above information serves as the receipt of, or substitute for, personalized individual advice. This represents the opinions of Focus Partners, may contain forward-looking statements, and presents information that may change. Nothing contained in this presentation may be relied upon as a guarantee, promise, assurance, or representation as to the future. Investing involves risk, including, but not limited to, loss of principal. Numerous representatives of Focus Partners may provide investment philosophies, strategies, or market opinions that vary. The appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives. This is prepared using third party sources considered to be reliable; however, accuracy or completeness cannot be guaranteed. The information provided will not be updated any time after the date of publication. Please be advised that Focus Partners only shares video and content through our website or other official sources. Services and investment advice are only provided pursuant to an advisory agreement with the client. Focus Partners' Form ADV Part 2A and 2B and Privacy Statement will be provided as required by law and include a description of fees payable for investment advisory services. Services are offered through Focus Partners Advisor Solutions, LLC and Focus Partners Wealth, LLC (collectively referred to in this document as “Focus Partners”), SEC registered investment advisers. Registration with the SEC does not imply a certain level of skill or training and does not imply that the SEC has endorsed or approved the qualifications of the RIAs or their representatives. Prior to January 2025, Focus Partners Advisor Solutions was named Buckingham Strategic Partners, LLC, and Focus Partners Wealth was named The Colony Group, LLC. ©2026 Focus Partners Wealth, LLC and Focus Partners Advisor Solutions, LLC. All rights reserved. RO-26-5363172