# Bridging the $6.85 Billion Funding Void: Why Schools Must Act Now

Federal student loan policy changes are set to disrupt higher education financing in a major way. With the elimination of **Grad PLUS loans** and the **capping of Parent PLUS loans**, an estimated **$12.93 billion** in federal loan funding will disappear — and even after accounting for private lending and limited school payment plans, a staggering **$6.85 billion gap** remains.

This gap isn’t abstract. It’s the difference between students enrolling and walking away. And unless institutions act quickly, the fallout could be devastating for both students and schools.

## The New Funding Gap

Here’s what the numbers tell us:

- **Grad PLUS loans eliminated**: A critical lifeline for graduate and professional students vanishes.
- **Parent PLUS loans capped**: Families can no longer borrow up to the full cost of attendance.
- **Partial coverage from private lenders (40%) and school payment plans (5.8%)** still leaves more than **$6 billion unmet**.

**Source:** [FSA Direct Loan Program Loan Volume Portfolio](https://studentaid.gov/data-center/student/title-iv)

## Why Delay Is No Longer an Option

For colleges and universities, this isn’t a distant policy debate — it’s an enrollment emergency. Without action, institutions will see:

- **Sharp declines in access** as students lose federal funding options.
- **Lower persistence rates** as financial gaps force students to stop out mid-program.
- **Increased revenue volatility** as tuition dollars tied to PLUS borrowing disappear.

The bottom line: **Every semester you wait to address this, enrollment and retention risk grows.**

## The Opportunity for Institutions

Institutions have a chance to turn this crisis into a strategic advantage. By creating **flexible, school-funded financing programs**, colleges can:

### Increase Enrollment Yield

Offer affordable, no-cosigner or income-based loans to students who can’t access other funding, ensuring they enroll and stay enrolled.

### Boost Graduation Rates

Cover past-due balances and close affordability gaps, keeping students on track to finish their programs and protecting tuition revenue.

### Reduce Discount Rates

Replace grant or gift aid with outcomes-contingent financing. Turn what would have been an expense into a recoverable receivable, reinvesting repayments into future students.

## How Clasp Can Help

Clasp provides **end-to-end support** to help schools launch high-impact institutional lending programs without the operational burden:

- **Precision underwriting** and compliance oversight.
- **Enrollment- and cash flow–aligned forecasting.**
- **Real-time ROI tracking and analytics.**
- **Lifecycle servicing and collections management.**

The result? A **sustainable financial aid solution** that drives enrollment, improves retention, and protects your bottom line.

## Get the Full Guide

Our [**Bridging the $6.85B Funding Void Guide**](https://cdn.sanity.io/files/frfcy09i/clasp-prod/b6ad4744a1940ac1df991739db0c61b2a40adf4b.pdf) breaks down the policy shifts, quantifies the funding gap, and outlines actionable strategies for higher ed leaders to close it.