The 2027-28 FAFSA Is Already Open. File Now, and Plan Around the New $20,000 Parent PLUS Cap
Last updated 10/09/2026 by
SuperMoney Team
Edited by
Andrew Latham
Summary:
The 2027-28 FAFSA opened on September 23, 2026, the earliest launch ever, and it uses your 2025 tax return. File now, because some grant money is first-come, first-served. And if you’re a parent planning to cover the gap with Parent PLUS loans, run the numbers first: new rules cap them at $20,000 a year and $65,000 total per student, which may leave a hole in year four.
If you have a student heading to college in fall 2027, the Free Application for Federal Student Aid is already open. The Education Department launched the 2027-28 FAFSA on September 23, 2026, about a week ahead of the October 1 legal deadline and one day earlier than last year’s record.
That’s good news. Filing early is one of the easiest ways to get more free money for college. But this year’s cycle comes with a catch that a lot of families haven’t absorbed yet. It’s the first full application year under new federal borrowing limits that took effect July 1, 2026, and those limits change the math for parents in a big way.
Let’s cover both: how to get the FAFSA done quickly, and how to plan around the new loan caps before you commit to a school.
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Why you should file this week (or at least this month)
The FAFSA is the gateway to federal Pell Grants, federal student loans, work-study, and a lot of state and college aid too. Many schools won’t even look at you for their own need-based grants until they have your FAFSA results.
Timing matters more than most people think. Saving for College reports that students who file in the first three months of the application window tend to get about twice as many grants, on average, as those who file later. Part of that is because some state programs award money until it runs out. Illinois’ MAP grant, for example, has a history of running dry in the spring. If you file in April, you may be competing for scraps.
Early filing also gives you your aid picture sooner. That means you can compare offers side by side before the May 1 decision day most colleges use, instead of guessing.
What you need before you start
The Department says many families can finish the form in about 15 minutes. That’s realistic if you gather a few things first:
- A StudentAid.gov account for the student and for each parent or “contributor” whose info is required. Set these up a few days early, because identity verification can take a bit.
- Your 2025 federal tax return. The 2027-28 FAFSA uses “prior-prior year” income, so it’s the return you filed this past spring. You’ll consent to have the IRS transfer the data directly.
- Current balances of cash, savings, checking, and non-retirement investments. You don’t report retirement accounts or the value of the home you live in.
- A list of schools. You can list up to 20. Add every school your student is seriously considering, even reach schools.
A few improvements this year make it easier. Later this fall, the Department plans to pre-fill some sections using your previous FAFSA. Students can invite a parent to fill in their section with a simple code or by text message. And the form now shows potential earnings outcomes for the schools you list, which is useful context before you borrow.
One more thing: the FAFSA is free. If a website asks you to pay to file it, close the tab. The only official site is StudentAid.gov.
The part families are missing: the new Parent PLUS cap
For years, Parent PLUS loans worked as the backstop. Whatever the student’s aid and loans didn’t cover, a parent could borrow up to the full cost of attendance. No hard ceiling.
That’s over for new borrowers. Under the changes that took effect July 1, 2026:
- Parents can borrow up to $20,000 per year per dependent student in Parent PLUS loans (combined across both parents).
- There’s a $65,000 lifetime cap per dependent student.
- Grad PLUS loans are gone for new graduate borrowers.
Parents who already took out a Parent PLUS loan for a student before July 1, 2026, can generally keep borrowing under the old rules for that same student, in the same program, for up to three more academic years or until the student finishes, whichever comes first. If your older child is already in college, check with the school’s aid office. The exception doesn’t carry over to a younger sibling starting in fall 2027.
Here’s how the cap plays out on a real budget
Let’s say your student gets into a private college with a total cost of attendance of $62,000 a year. The financial aid offer includes $24,000 in grants and scholarships, plus the standard $5,500 federal Direct loan for a first-year student.
- Cost of attendance: $62,000
- Minus grants and scholarships: $24,000
- Minus student’s federal loan: $5,500
- Remaining gap: $32,500
Under the old rules, you could have covered all $32,500 with Parent PLUS. Now the max is $20,000. That leaves $12,500 a year you need to pay from savings, income, a 529 plan, or a private loan.
And look at year four. If you borrow the full $20,000 in years one through three, you’ve used $60,000 of your $65,000 lifetime limit. Senior year, you can only borrow $5,000 more. A family that planned on four years of $20,000 loans suddenly has a $15,000 surprise right before graduation.
Better to find that out now than in the spring of 2030.
And Parent PLUS isn’t cheap
Even within the cap, think hard before you max it out. For loans first disbursed between July 1, 2026, and June 30, 2027, the Parent PLUS interest rate is 9.07%. There’s also an origination fee of about 4.2% taken off the top. Borrow $20,000, and roughly $846 disappears before the money ever reaches the school.
On a standard 10-year repayment plan, $20,000 at 9.07% costs about $254 a month. Borrow the full $65,000 over four years at that rate and you’re looking at roughly $826 a month for a decade, with more than $34,000 of that going to interest.
A simple rule I give parents: don’t borrow more in total than you could repay within 10 years without delaying your own retirement. Your kid can borrow for college. You can’t borrow for retirement.
How to close the gap without overborrowing
1. Compare net price, not sticker price. Once aid offers arrive, subtract grants and scholarships (free money only) from the cost of attendance. That’s your real price. Loans don’t count as aid for this math, even though some offer letters lump them in.
2. Appeal your aid offer. If your income dropped since 2025, or you have unusual medical bills or other special circumstances, ask the aid office for a “professional judgment” review. Bring documents. This is a normal request, and schools handle them every year.
3. Ask about payment plans. Many colleges let you spread each semester’s bill over four or five monthly payments for a small enrollment fee and no interest. On a $12,500 annual gap, that’s about $1,250 a month over 10 months instead of a lump sum.
4. Shop private loans carefully. If you still need to borrow, compare private student loan offers from several lenders using prequalification, which uses a soft credit check and won’t hurt your score. Parents or student-cosigner pairs with strong credit may find fixed rates below 9.07%. But private loans don’t come with federal protections like income-driven repayment, so they should come after federal student loans, not before.
5. Reconsider the school list. This is the hard one. If a school only works with $30,000 or more in yearly parent borrowing, it may simply cost more than your family can carry. An in-state public school or a college that offers strong merit aid could save six figures.
If you’re juggling tuition bills, existing debt, and your own goals, the SuperMoney app can help. You can track your debts and spending in one place, set a college savings goal, and see how a new monthly loan payment would fit alongside everything else before you sign anything.
Don’t forget the student’s side
Dependent undergrads can borrow federal Direct loans in their own name: $5,500 in year one, $6,500 in year two, and $7,500 in years three and four. The undergraduate rate for 2026-27 is 6.52%, well below the parent rate. It usually makes sense to use the student’s federal loans before any parent borrowing, since they’re cheaper and come with more repayment options.
Also check Pell Grant eligibility. The maximum Pell Grant for 2026-27 is $7,395, and it doesn’t have to be repaid. You won’t know if you qualify unless you file.
Key takeaways
- The 2027-28 FAFSA opened September 23, 2026, and uses 2025 tax return data.
- Students who file in the first three months tend to get about twice as many grants, on average, according to Saving for College.
- New Parent PLUS borrowers are capped at $20,000 a year and $65,000 total per dependent student.
- Borrowing the max for three years leaves only $5,000 available for senior year.
- Parent PLUS loans for 2026-27 carry a 9.07% rate plus a roughly 4.2% origination fee.
- The maximum Pell Grant is $7,395 for 2026-27, and the only way to get it is to file.
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