The College Funding Gap Year
Explains why college funding gaps are becoming more common starting in 2026 and outlines practical options families can use to close the gap without defaulting to last minute, high cost borrowing.
Juno Team
Jan 07, 2026
If you didn’t receive enough financial aid to cover the full cost of college, you are not alone. And starting with the 2026-27 academic year, this will become an even more common problem for incoming undergraduate students and their families. Federal loan limits are tightening, Parent PLUS borrowing will be capped, and many schools will no longer be fully “fundable” with federal aid alone.
That does not mean college is out of reach. It does mean families need to understand their options earlier and make decisions intentionally rather than reactively.
Why This Problem Is Becoming More Common
For decades, gaps between financial aid and total cost were often closed with Parent PLUS loans. That flexibility is going away for new students starting in 2026. At the same time, tuition, housing, and meal costs continue to rise faster than household income for many families.
The result is a new reality. Even families who expected federal aid to “make it work” may now face meaningful shortfalls that require a mix of strategies.
How Financial Aid Is Calculated
Colleges determine aid eligibility based on information submitted through the FAFSA, along with their own institutional formulas. Aid offers are built using a mix of grants, scholarships, work-study, and loans. Importantly, the offer reflects what the school believes you can pay, not necessarily what feels realistic for your family.
Even after receiving an aid package, your school’s financial aid office remains a key resource. Many students never realize that aid offers can sometimes be revisited or supplemented if circumstances have changed.
Option One: Scholarships Still Matter
Scholarships are one of the few ways to reduce cost without repayment. Many have deadlines and application requirements, so organization matters. Local and smaller scholarships often have fewer applicants and better odds. School-based, community, employer-sponsored, and interest-based scholarships can all help narrow the gap.
Option Two: Request an Aid Adjustment
If your family’s financial situation has changed since filing the FAFSA, it may be worth requesting an aid adjustment, sometimes called a professional judgment. Situations like job loss, reduced income, divorce, medical expenses, or other major disruptions are not always reflected accurately in FAFSA data.
Schools review these requests individually and may require documentation. Outcomes are not guaranteed, but for some families this step can meaningfully change an aid offer.
Option Three: Reduce Living Costs Where Possible
Non-tuition costs add up quickly. Food, housing, and health expenses are areas where some students can reduce out-of-pocket spending. Programs like SNAP, campus food pantries, lower-cost meal plans, or alternative housing options can ease pressure without increasing borrowing.
Option Four: Work, With Limits
Federal Work-Study can help offset expenses if awarded, but even without it, many campuses offer part-time jobs. The key is balance. Modest work hours can help with cash flow, but excessive hours can hurt academic performance and long-term outcomes.
Option Five: Tuition Payment Plans
Many schools offer payment plans that spread remaining balances across the semester rather than requiring a lump sum. These plans do not reduce total cost, but they can improve cash flow and prevent late fees or emergency borrowing.
Option Six: Additional Federal Loans
Parent PLUS loans are still available, though starting in 2026 they will be capped for new students. If a parent is denied a PLUS loan, dependent students may become eligible for additional unsubsidized federal loans.
Federal loans come with fixed rates and protections that private loans usually lack, however, the interest rates are usually higher than private loans negotiated by Juno.
Option Seven: Navigating Private Loans Carefully
When federal aid falls short, many families consider private student loans. This is where things become slightly more involved. Private loans are credit-based, often require a cosigner, and vary widely in rates, terms, and repayment flexibility. Comparing options can be confusing, especially under time pressure.
This is an area where preparation and transparency matter. Juno helps families navigate private loans by pooling borrower demand to negotiate lower rates and clearer terms. There is no obligation to borrow, but seeing negotiated offers side by side can help families understand the true landscape before committing.
Final Thoughts
A financial aid gap does not mean failure. It means decisions matter more. Starting in the 2026-27 academic year, more families will need to plan proactively, compare total four-year costs, and understand tradeoffs earlier in the process.
Before making final decisions, it is worth speaking with your school’s financial aid office and revisiting choices around housing, meal plans, and course load. A realistic plan, even if imperfect, is far better than scrambling once bills come due.
Written By
Juno Team
Juno came into existence to help students save money on student loans and other financial products through group buying power by negotiating with lenders. The Juno Team has worked with 200,000+ students and families to help them save money.
