IF YOU’RE EXPECTING to borrow money to cover your kid’s college tuition, one option is getting more restrictive.

Starting July 1, the federal government will reduce the amount that parents of undergraduates can borrow through the parent PLUS program, while imposing strict new fixed repayment terms. Here’s what you need to know:

What are parent PLUS loans? These are federal loans in the parent’s name, meaning you apply for and are approved for the loan instead of your child. It also means you’re on the hook to pay the money back, with interest. Many parents rely on PLUS loans because grants and student loans haven’t kept pace with rising college costs. About 550,000 parents take out PLUS loans each year, borrowing an average of $22,600, according to the College Board.

What is changing? Until now, the government let parents borrow up to the full cost of attendance for their child’s undergraduate program each year. But new PLUS borrowers will be capped at $20,000 per student per year, with a lifetime per-child maximum of $65,000. And the government will discontinue flexible repayment plans that adjust the length of the loan term to keep monthly bills in line with a parent’s income. New loans must be repaid over a fixed term of 10 to 25 years, depending on the parent’s total PLUS debt.

What other college funding options are available? Federal student loans are capped at $5,500 for freshmen, increasing slightly after that. Private loans are also available, but because college students typically don’t have the necessary credit to qualify, parents often need to cosign those loans.

What about using a 401(k)? Jack Wang, a wealth adviser in Lexington, Massachusetts, discourages borrowing against a 401(k) because it diminishes your retirement savings growth. Federal laws allow penalty-free withdrawals from IRAs to cover tuition, fees and books, but, Wang cautions, such withdrawals may affect future tax bills and financial aid awards. —Kim Clark