As a new wave of federal policies around financial aid take hold in the summer of 2026 — marked by restricted borrowing limits and a greater emphasis on funding short-term credentials — the shift is being framed as a victory for fiscal responsibility. But when you peel back the legislative veneer, scholars worry that a more troubling picture lies beneath: a system that is becoming increasingly “blunt" in its application and racialized in its impact.
Many financial aid advisors are still trying to sort through what these changes actually mean, especially for the students often left in the margins. Among many who have made their careers studying financial aid tax, there is a deep sense of trepidation about an additional anxiety tax being levied on first-generation students and families of color.
The myth of price suppression
One big concern is around the elimination of Grad PLUS loans and the tightening of Parent PLUS caps, which Melanie Storey, president of the National Association of Student Financial Aid Administrators (NASFAA) said was ostensibly, to force institutions to lower their prices. The theory is simple: if students can’t borrow as much, colleges will have to charge less.
"The truth of the matter is I think there was a hope that it would drive prices down on campuses for some of those programs," Storey said "But the end result is that those limits on borrowing will likely have outsized impact on students without other resources."
Storey notes that we are currently at a "major pain point," where institutions are being forced to take a hard look at which programs can even survive without the lifeblood of federal borrowing. While high-priced private institutions might be able to lean on their massive endowments to bridge the gap for low-income students, practically, the landscape is seeing even the richest institutions tightening their belts.
