As federal aid for college shrinks, here’s what to look for in a private student loan

Starting July 1, changes introduced in the One Big Beautiful Bill Act last year will add new caps on federal student loans , as well as restrictions on loan forgiveness and repayment programs. The result, student loan experts say, will be a greater reliance on private loans to cover financial gaps. Graduate students will be particularly impacted, according to Robert Farrington, a personal finance expert and founder of The College Investor . "Previously, graduate students could take out Graduate PLUS loans up to the cost of attendance," Farrington told CNBC Select. "That program is ending, though, and now federal Direct Unsubsidized Loans for grad students will be capped for the first time ever. There's going to be a huge influx of [private] borrowing simply because of those annual caps." Undergraduates will also be affected by the new regulations, Farrington added, though less directly. "For [dependent] undergraduate students, federal loan limits are very low — a freshman can only borrow $5,500 on their own," he said. "Typically, parents would step in with Parent Plus loans, which were previously uncapped." But now, Parent Plus loans for new borrowers are limited to $20,000 per student per year and $65,000 in total. "Do the math — $20,000 a year times four is not $65,000," Farrington said. "A parent might start out freshman year borrowing $20,000 for their child, and then do the same thing sophomore and junior year. …