- The Big Beautiful Bill eliminates Grad PLUS loans starting in the 2026-27 school year.
- Graduate students will face stricter borrowing limits and will need to rely on unsubsidized federal loans or private loans.
- Experts warn that this shift could reduce access to professional programs such as law, medicine and education.
The federal Grad PLUS loan, which has helped graduate students bridge the gap between tuition and federal direct loan limits since 2006, is on the way out. The “Big Beautiful Bill,” passed by the House and Senate and signed into law by President Trump on July 4, 2026, phases out the Grad Plus loan program beginning in the 2026-27 school year.
The change is part of a broader effort to reduce federal lending and focus taxpayer subsidies on college education and workforce training. The proposal sets a lifetime cap of $100,000 for federal graduate student borrowing, or $200,000 for professional school borrowing, on top of existing limits for undergraduates. Once a student reaches this ceiling, federal borrowing ends.
Under current rules, graduate students can borrow up to the full cost of attendance through Grad PLUS, subject to a credit check but with no annual or total maximum.
For graduate and professional programs where tuition often exceeds $50,000 annually, the change creates an immediate funding gap. Law and medical students, in particular, face some of the highest tuition costs in the country, with total tuition and fees at private schools often exceeding $200,000. Without the Grad PLUS program, many students will have to turn to private loans with higher interest rates and less protection.
This also comes America faces a shortage of doctors. Restricting access to these programs may exacerbate the problem.
What are the limitations for new graduate students?
Under current rules, graduate and professional students can borrow up to their full cost of attendance through Grad PLUS loans. However, with the elimination of Grad PLUS loans, the only option will be Direct Loans for Graduate Students, which will have new limits for graduate and professional students.
From the draft law, the new limits will be as follows:
- Postgraduate students (Masters): $20,500 per year, total limit $100,000.
- Professional students (e.g. law, medicine): $50,000 per year, total limit $200,000.
It is important to note that these limits are in addition to college borrowing. If you’re not sure whether you’re a graduate or professional student, here’s a guide: Graduate vs. Professional Student Loans.
There is also a grandfathering provision built into the Senate bill, which would allow borrowers who already had at least one Grad PLUS loan before June 30, 2026, to continue borrowing until the end of their program, or three school years, whichever comes first.
Access to the graduate program may be restricted
If students cannot pay for graduate studies, they will not be able to attend. This may restrict graduate programs to those who can already afford them, making things like becoming a doctor only available to those from wealthy families.
The biggest problem is in fields like education and social work, where starting salaries are often low, but promotions and even state laws require college degrees. For example, most states require social workers to have a master’s degree in order to do clinical work.
In teaching, countries e.g New York requires a teacher to have a master’s degree Within 5 years of becoming a teacher… These requirements will be burdensome if students cannot obtain the funding they need to pay for these requirements.
Federal lending may shrink, and private lending may rise
The change is consistent with other aspects of the bill aimed at shrinking the size of the federal student loan portfolio. By lowering federal borrowing limits and eliminating types of loans, policymakers are signaling a shift toward reducing federal support for higher education.
But in the short term, this change is expected to increase demand for private student loans. Unlike federal loans, private loans come with fewer consumer protections, often require a co-signer, and can carry variable interest rates. They are also excluded from most federal student loan forgiveness programs. However, some private lenders have expressed that they may not be able to fill this gap – simply because they are concerned about the risks.
It is important to note that private borrowing involves other challenges. For example, teachers and social workers cannot get private loan forgiveness using programs like Public Service Loan Forgiveness (for which they typically qualify).
For doctors, who may also be eligible for PSLF, the average cost of medical school is $205,000. If the federal loan limit is $100,000 or $200,000, this means they will have to privately finance the remaining amount after the limit. This would lead to higher costs, and this portion of their debt would not be forgiven.
Graduate students are among the most reliable borrowers in the federal loan system. They have lower default rates and often earn enough after graduation to pay off their debts. But their loan balances are much higher, too.
More expensive paths to graduate study
The phaseout of Grad PLUS loans will not affect current students immediately. Borrowers who have already received a Grad PLUS loan will continue to have access for up to three more academic years (at least under the current version of the bill). But students who plan to begin graduate studies in fall 2026 or later will need to rethink how they finance their degrees.
It’s important to note that graduate students can still borrow for graduate school—they just face new caps under the Direct Loan Program.
Supporters of the bill argue that limiting federal borrowing could prompt institutions to contain costs and reduce the overall burden of graduate debt. Opponents say this risks cutting off opportunities for students who do not have financial support.
Moving forward, students will need to think differently about the finances of their graduate studies.
Frequently asked questions
What are the proposed changes to Grad PLUS loans?
Congress Ends Grad PLUS Loans.
When do Grad PLUS loans for new borrowers expire?
Grad PLUS loans will expire for the 2026-27 academic year, which begins July 1, 2026.
How will eliminating Grad PLUS loans affect graduate students’ ability to pay for school?
Grad PLUS currently allows borrowers to borrow up to their total cost of attendance. The new bill would impose borrowing limits on direct loans for graduate students to $100,000 and professional students to $200,000.
Which graduate and professional programs are most affected by these changes?
High-cost programs such as medical school, dental school, and law school will be most affected.
Why is Congress proposing to cancel Grad PLUS loans?
Congress cancels Grad PLUS loans because they have large balances compared to the number of borrowers.
How might these changes affect access to higher education and some careers?
Cancellation of Grad PLUS loans can limit access to higher education and some professions, such as medicine or law.
What is the timeline for implementing these proposed changes?
Grad PLUS loans for new students will be forfeited after July 1, 2026.
What should prospective graduate students do to prepare for these changes?
There is not much to do to prepare. Current graduate students will have a three-year grace period to take advantage of the current program. New students after July 1, 2026 will have to follow the new rules if they pass.
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