Starting next year, it will become more challenging for some Americans to afford the costs of a graduate degree.
Congressional passage of the One Big Beautiful Bill Act, a 1,100-page behemoth, will impact countless aspects of American life, including taxes, immigration, the environment, defense and yes, education.
Individuals who hope to obtain an advanced degree will encounter a lifetime cap on how much they can borrow from the federal government and how much they can borrow annually. The lending limits for undergraduates will remain the same.
Currently, graduate and professional students can borrow up to their school’s cost of attendance. The best federal loan for these borrowers is the Direct Loan, but there is a lifetime cap for this loan of $138.500, including any previous undergrad borrowing. If any additional money is needed, students have been able to tap into the Grad PLUS Loan, which has allowed them to borrow whatever extra money is needed up to the school’s cost of attendance.
Starting on July 1, 2026, which marks the official start of the 2026-2027 school year, students in graduate programs will be able to borrow no more than $20,500 a year, and the lifetime cap for the Direct Loan for grad students will be $100,000.
Also beginning next July, the Grad PLUS loan will no longer be available for new grad students. Current grad students, however, will be able to continue to borrow through this loan if they have no more than three years remaining in their education.
Under the new rules, the maximum annual amount that students in professional programs can borrow will be $50,000, with a lifetime cap of $200,000. The Grad PLUS Loan will also be eliminated for professional students, but the grandfather provision mentioned previously will also apply.
Among the professional programs that qualify for the higher borrowing amounts are those that educate these future professionals:
A new report from the American Enterprise Institute entitled, An Analysis of the One Big Beautiful Bill Act’s Effects on Student Loans, included the current graduate programs with the share of their students borrowing more than the future limits will allow. Among the programs that currently have the highest percentage of borrowing exceeding the new limits are:
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Medicine or Osteopathic Medicine
Reactions to the Lending Changes
Responses to the upcoming changes are mixed. Critics argue that limiting the amount of money you can borrow for advanced degrees will shut out lower-income individuals wanting to continue their schooling. They argue, for instance, that medical schools will only be able to cater to wealthy individuals who can afford to become physicians.
On the other hand, supporters of the change say the unlimited borrowing for graduate and professional schools has led to inflated tuition prices and excessive borrowing since individuals have been able to borrow enough to cover the entire cost of attendance, regardless of how outlandish the price tag is. While graduate students represent 15% of borrowers, they are responsible for 40% of the federal higher-ed debt. People in this camp hope that lending caps will encourage universities to rein in their prices.
Students who won’t be able to borrow enough can turn to private loans if they can pass the underwriting which isn’t a barrier for federal loans. Private loans won’t have the protections of federal loans including a variety of repayment options. Private lenders haven’t been as active in this market because of the ability to easily borrow federally, but this is expected to change.
Measuring Income Outcomes
Americans who want to further pursue their education after obtaining their bachelor’s degree will face another potential roadblock. Thanks to the new legislation, schools will be punished if their undergraduate and graduate students fail to earn what the federal government considers an acceptable salary.
Students attending academic programs where the salaries of graduates, aged 24 to 34, don’t meet the salary standard for individual majors, won’t be able to obtain federal loans.
As a hypothetical example, students majoring in nursing or economics at a school could borrow federally because of the earnings history of these programs, but at the same institution, students majoring in drama or gender studies might not have access to this money.
Jeff Selingo, the former top editor of The Chronicle of Higher Education, has predicted that the salary guidelines could hurt some expensive graduate programs. Here is what he wrote about the new challenge for colleges and universities:
“With the spigot of easy money tightening, we’ve probably seen the end of the $150,000 MFA from the University of Southern California, the $125,000 master’s in journalism from Columbia, or the $100,000 master’s of arts in humanities at the University of Chicago. Either those programs get a massive tuition cut, offer heavy discounts off the sticker price, or some will likely close down altogether.”
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