My financial planner friends called my attention to a curious headline in Financial Advisor Magazine: “How Student Loans Became Part of Estate Planning”. The premise underlying the title: “Under the loan provisions of the One Big Beautiful Bill Act, signed into law on July 4th, 2025, the federal government now imposes hard ceilings on education borrowing for new loans. For affluent families, this is less a financing problem than a planning one. The money that used to come from a federal loan now has to come from somewhere else, and for families with taxable estates, the decision now involves the family’s estate plan.”…
The authors go on to explain the specific law changes that can affect estate planning for parents and grandparent of college students:
- Grad Plus is gone. This program, which allowed graduate and professional students to borrow up to the full call of attendance, has been eliminated for new borrowers.
- Graduate student borrowing is capped at $20,000 a year, $100,000 in total for most masters’ and doctoral programs.
- Parent Plus loans are capped(at $20,000 per year, $65,000 per student over a lifetime (in place of a cost-of-attendance ceiling).
- All federal student borrowing is capped at an aggregate lifetime amount of $257,500 (This excludes borrowed monies under Parent PLUS).
- The new Repayment Assistance Plan requires a minimum payment based on Adjusted Gross Income.
In reaction to all these changes in federal lending, the authors explain, the private loan market is moving to fill the gap. The problem – private loans require credit-worthy co-signers, most often a parent or grandparent. “Advisors warn that a grandparent co-signing in their 70s takes on a 15-year obligation than can outlast their working income.”
As Indiana estate planning attorneys at Geyer Legal, we develop estate plans tailored to our clients’ current situations and needs. When material changes in circumstances impact our client’s estate plan, we caution, they should re-evaluate the plan to ensure maximum protection. To the extent these drastic changes in education loan availability are likely to impact a client’s children, grandchildren, nieces and nephews, it may be time to discuss options for being of assistance without jeopardizing our client’s own financial and estate plans.
Often grandparents who have ample resources want to help with younger relatives’ costs, providing opportunities that would otherwise be out of reach for them. Yet with grandparents not always feeling equally close to all their grandchildren, nieces and nephews, we encourage careful thought –and open conversations.
– by Rebecca W. Geyer
