- Grad PLUS loans for new borrowers expire after June 30, 2026, due to the One Big Beautiful Bill Act (OBBBA).
- Graduate and professional students will still be able to borrow federal loans through the Direct Loan Program, but with annual and lifetime limits.
- The grandfather clause protects certain existing borrowers from the Grad PLUS program for a limited time.
Graduate students will still be able to borrow federal student loans after July 1, 2026 — but not in the same way they have for years.
OBBBA is terminating Grad PLUS loans for new borrowers starting in the 2026-27 school year. For nearly two decades, the Grad PLUS program has allowed graduate and professional students to borrow up to the full cost of attendance published by the school, effectively removing any limits on borrowing. This option will disappear.
Instead, federal borrowing for higher education will be limited to direct loans with annual and lifetime caps. This change does not eliminate federal loans for graduate school, but it imposes limits that many students have not encountered before. This may force more graduate students to take out private student loans, but there is also a significant risk that private lenders will not fill the remaining gap.
New graduate student loan limits
Under the system that will expire, graduate students and professionals can borrow up to their full cost of attendance through a combination of Direct Unsubsidized Loans and Grad PLUS Loans. These limits are set by schools, not Congress, which has allowed borrowing to rise along with tuition.
This structure expires on June 30, 2026.
Effective July 1, 2026, graduate students will no longer be eligible for Grad PLUS loans. Federal borrowing for higher education would be limited to direct loans, with caps set directly in law.
Under the new law, borrowing limits were set as follows:
- Graduate students (Master’s programs and most doctoral programmes):
$20,500 per year, with a maximum of $100,000 for life - Professional students (including law, medicine, dentistry and similar programmes):
US$50,000 per year, up to a maximum of US$200,000 for life
These limits apply only to graduate-level borrowing. Federal loans taken out during college do not count toward these caps.
The distinction between graduate and professional programs is based on federal program classifications. Law and medical degrees generally fall within professional boundaries, while most master’s degrees and Ph.D. The programs are treated as postgraduate programmes.
Grandfather clause for existing Grad PLUS borrowers
The law includes a provision designed to protect students who are already using Grad PLUS loans.
Borrowers who currently had at least one Grad PLUS loan before June 30, 2026, can continue to borrow through the Grad PLUS program under current rules. This protection continues until the borrower completes their current program or for an additional three academic years, whichever comes first.
The grandfather rule applies only For borrowers who have an active Grad PLUS loan before the deadline. Students who defer borrowing until after June 30, 2026, even if they are already enrolled, will be subject to the new Direct Loan limits.
It’s important to note that the grandfathering requirement only applies to borrowing limits — not to repayment plan changes. If you borrow a student loan after July 1, 2026, you will only be offered the new Repayment Assistance Plan (RAP) or the new Standard Repayment Plan.
How will the new borders affect students and schools?
New borrowing limits fundamentally change how higher education is paid for.
Students facing costs that exceed federal limits may need to rely on personal savings, employer tuition benefits, institutional grants, or private loans for graduate students. Some may reconsider the choice of program, the timing of enrollment, or whether part-time study makes financial sense.
Programs whose tuition exceeds federal borrowing limits may face pressure to expand institutional aid or justify costs to students who no longer have unlimited federal funding.
How to plan for graduate school after July 2026
Students planning higher education after 2026 have a clearer decision-making framework. It’s not necessarily perfect, but it’s known.
Comparing total program costs and understanding the long-term repayment effects of private borrowing may play a greater role in enrollment decisions.
For current students, confirming whether they qualify for the grandfathered Grad PLUS provision can significantly impact their remaining borrowing options.
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