Quick Summary: Starting July 1, 2026, the U.S. Department of Education will discontinue Grad PLUS loans and place stricter borrowing limits on graduate students. Graduate students will be able to borrow up to $100,000 total, while professional programs can borrow up to $200,000. The more than 440,000 students per year who rely on Grad PLUS loans will have to explore other options, including private loans and personal savings.
The Trump administration has made major changes to higher education financing options. In one major change, Grad PLUS loans, which help graduate and professional school students pay for their education, are ending after 20 years, starting July 1, 2026.
If you’re planning to attend graduate school, you’ll still have some financing options, but new caps limit the borrowing limits on graduate and professional programs to $100,000 and $200,000, respectively.
If you’re preparing for graduate school, it’s important to understand what’s happening to Grad PLUS loans in 2026, new lending limits, and how to navigate paying for higher education with these major changes.
What are Grad PLUS loans and how do they work?
Grad PLUS loans are a type of Direct PLUS loan specifically designed for graduate and professional students. Let’s talk about some of their key features and eligibility requirements.
Current Grad PLUS loan structure
Grad PLUS loans can be used to pay for the full cost of attendance minus any other financial assistance you receive. They have a fixed interest rate of 8.94% for loans disbursed between July 1, 2025, and July 1, 2026, plus a fixed loan fee of 4.228% of the loan funds.
Like other federal loans, Grad PLUS loans offer an automatic deferment while you’re in school, meaning you won’t have to start making payments until six months after you graduate, leave your program, or drop to less than half-time enrollment.
Unlike many federal loans, Grad PLUS loans require a credit check. Borrowers with an adverse credit history may either need an endorser (also known as a cosigner) or documentation to show extenuating circumstances behind their credit score, as well as successful completion of credit counseling.
Grad PLUS loans come with several different repayment options, including standard, extended, and income-driven plans. They have other federal benefits, including loan deferment and forbearance, as well as the potential for loan forgiveness or discharge, in some situations.
Who relies on Grad PLUS loans
More than 440,000 students across many different programs borrowed Grad PLUS loans in the 2023-24 academic year, according to the Council of Graduate Schools. They’re commonly used for a wide variety of graduate and professional programs, including medicine, law, dentistry, psychology, education, and more.
Grad PLUS loans have generally been widely available. The only requirements are to be enrolled at least half-time in an eligible graduate or professional program and to clear a credit check, as described above.
What’s changing with Grad PLUS loans in 2026?
The 2025 One Big Beautiful Bill Act (OBBBA) made some significant changes to student loans, including to the Grad PLUS loans and other graduate-level borrowing.
Grad PLUS loans are going away
Starting on July 1, 2026, Grad PLUS loans will be discontinued, and the Department of Education will no longer offer them. While graduate students will still have access to federal financial aid through the Federal Direct Loan program, strict limits will apply.
New borrowing caps for graduate programs take effect July 1, 2026
Another key change in the OBBBA is a strict cap on graduate and professional borrowing. Effective July 1, 2026, the following loan limits will apply:
- Up to $20,500 per year and $100,000 lifetime borrowing limit for graduate programs
- Up to $50,000 per year and $200,000 lifetime borrowing limit for professional programs
Unlike a key provision with the Grad PLUS loans, graduate and professional loans moving forward are no longer available up to the cost of attendance, meaning many borrowers may find themselves with a shortfall when paying for college.
Which programs qualify as “professional” degrees
The latest additional guidance from the Department of Education strictly limits the programs that are considered “professional” for the purpose of student loan borrowing. Only students pursuing the following degrees will be eligible for the higher professional annual and lifetime loan limits:
- Pharmacy (Pharm.D.)
- Dentistry (D.D.S. or D.M.D)
- Veterinary Medicine (D.V.M.)
- Chiropractic (D.C. or D.C.M.)
- Law (L.L.B. or J.D.)
- Medicine (M.D.)
- Optometry (O.D.)
- Osteopathic Medicine (D.O.)
- Podiatry (D.P.M., D.P., or Pod.D.)
- Theology (M.Div. or M.H.L.)
- Clinical Psychology (Psy.D. or Ph.D.)
Some notable professions are not included as professional programs, meaning they’ll be subject to the lower limits of $20,500 per year and $100,000 lifetime:
- nurses,
- social workers,
- educators,
- physical therapists,
- MBAs, and more.
At this time, it doesn’t appear that those degrees will be eligible for the higher professional loan limits. Any programs that aren’t considered professional school programs, which include most master’s degrees, will be subject to the lower loan limits for graduate degree programs.
How current students are affected
It’s not entirely clear how current Grad PLUS borrowers will be affected by the elimination of these loans and the new loan caps. It’s likely that current borrowers will have up to three years to continue borrowing Grad PLUS loans to complete their programs.
New borrowers will immediately face the new borrowing caps starting on July 1, 2026, but any existing loans won’t count toward the new lifetime borrowing limits. This exception will make it easier for current students to finish their degrees.
How will these limits affect graduate school financing?
These changes to student loans for advanced degrees will have a major impact on the way people finance their degrees. Let’s talk about some of the biggest changes and challenges.
Programs most impacted by the new caps
Many professional and graduate-level degrees will be impacted by the new loan caps. Many professional degree programs, including medical, dental, and law schools, exceed the new $50,000 per year and $200,000 lifetime borrowing limit.
For example, the average cost of medical school in 2024-25 was $59,720 per year, with the average total degree cost being $228,959 for 2025 graduates, according to Education Data. And that cost doesn’t include room and board.
The cost of additional living expenses, including room and board, will vary significantly depending on where you’re attending school. Living expenses in a high-cost-of-living state are likely to be far higher.
Some medical schools may share information about typical costs. For example, the University of Wisconsin estimates that first-year medical students will spend just over $30,000 on additional living expenses. Over four years, that would add an extra $120,000 to your total costs.
Students also pay more than $200,000 on average to attend both law school and dental school. Borrowers without significant savings may be forced to borrow private loans or choose a different profession altogether.
These numbers don’t take into account the significantly higher price tags on private institutions, which can easily cost more than $300,000.
These new limits will also present challenges to graduate-level degrees. There are plenty of other master’s and doctoral-level programs with price tags exceeding $100,000. The new limits may put private university programs out of reach for many students.
The shift to private student loans
A key change that’s likely to come from these stricter borrowing limits is an increase in the number of graduate and professional students borrowing private student loans. While these loans are generally available up to the cost of attendance, they have some downsides.
Private student loans differ from federal loans in important ways. Interest rates currently range from about 3% to 16% based on your credit and the lender, compared to the 8.94% fixed rate on current Grad PLUS loans. Borrowers with excellent credit may qualify for rates significantly lower than federal loans, while those with weaker credit will pay more. Most lenders require strong credit scores, and many graduate students will need a cosigner to qualify for the best rates.
Unlike federal loans, private loans don’t offer income-driven repayment plans or loan forgiveness programs. However, they can cover costs up to your full cost of attendance, making them a necessary option for students who exceed federal borrowing limits.
All of these factors combined could make advanced degrees more expensive to get and more difficult to repay.
Potential impact on graduate education access
As we’ve mentioned, these new federal loan limits are likely to cause some students to rethink their career paths. Many students may decide to delay graduate school until they can save more money, or even forgo graduate school altogether.
As fewer students attend graduate school, programs may see their enrollments decline, and some programs may even be forced to close. These effects are likely to trickle down to the careers themselves, as some fields may see worker shortages (likely fields that already don’t have enough workers, like advanced nursing and social work).
How to prepare for graduate school costs under new limits
There’s no doubt these new student loan changes will present challenges if you’re planning to attend graduate school, but there are steps you can take to mitigate the effects.
Research total program costs early
With stricter loan limits in place, researching the total cost of a degree program is more important than ever. Make sure your program’s cost falls below the borrowing, especially if you plan to rely on loans for most or all of your education expenses.
You may also need to expand your school options. If you were previously only considering private or out-of-state programs, it may be necessary to look at in-state, public, online, or part-time options.
Explore alternative funding sources
Limited access to student loans will force you to get more creative with your funding sources, which could end up being a positive thing.
There are plenty of other funding mechanisms available. If you have time before starting your program, tax-advantaged savings accounts, such as 529 plans, can help. Many employers offer tuition assistance programs, and more may do so as it gets harder to qualify for the loans you need. You can also consider graduate assistantships or fellowships and program-specific scholarships to cover your expenses.
Finally, consider enrolling part-time so you can continue working to cover your living expenses, and maybe even some of your tuition, while you’re in school.
Build credit before applying to graduate school
It may be more likely that you’ll need to rely on private loans to cover your education expenses. Because private loans require a credit check and your interest rate is based on your creditworthiness, it’s critical that you boost your credit before applying.
It’s best to start establishing your credit as early as possible. If you have less-than-ideal credit, you may also decide to apply with a cosigner to help you increase your chances of approval and land the best interest rates.
Planning ahead for graduate school financing
The elimination of Grad PLUS loans represents one of the most significant changes to graduate school financing in decades. With strict new borrowing caps taking effect July 1, 2026, graduate students will need to approach education financing more strategically than ever before.
If you’re planning to attend graduate school, start by researching your program’s total cost and understanding whether it falls under the graduate ($100,000) or professional ($200,000) lifetime limit. Calculate the potential gap between federal loans and your actual costs, then explore your options for bridging that gap through scholarships, employer assistance, personal savings, or private student loans.
The earlier you start planning, the more options you’ll have. Whether you’re years away from graduate school or applying next fall, understanding these new limits now will help you make informed decisions about your education and career path.
Frequently Asked Questions
What is the maximum amount I can borrow with Grad PLUS loans after 2026?
Starting on July 1, 2026, you’ll no longer be able to take out Grad PLUS loans for school. You can borrow up to $20,500 per year ($100,000 overall) for graduate programs and $50,000 per year ($200,000 overall for professional programs.
Do existing Grad PLUS loans count toward the new limits?
No, your existing Grad PLUS loans don’t count toward the new loan limits. The borrowing caps only apply to loans taken out on or after July 1, 2026.
Can I still complete my graduate program if I’m already enrolled?
Yes, you can still complete your program under the old Grad PLUS system for up to three years after July 1, 2026. The new loan limits and the discontinuation of Grad PLUS loans will apply to new students.
What happens if my graduate program costs more than the federal loan limit?
If your graduate program costs more than the federal loan limit, you’ll have to cover the difference using other funding methods, which could include private student loans, personal savings, scholarships, employer tuition assistance, or a job.
Which programs qualify for the $200,000 professional degree limit?
The only 11 programs that qualify for the higher professional degree loan limit are pharmacy, dentistry, veterinary medicine, chiropractic, law, medicine, optometry, osteopathic medicine, podiatry, theology, and clinical psychology.
