Grad PLUS Loans Will Be Ending In 2026

The federal Grad PLUS loan, which has helped graduate students fill the gap between tuition and federal Direct loan limits since 2006, is on track to disappear. The "Big Beautiful Bill", passed by by the House and Senate and signed by President Trump into law on July 4, 2026, phases out the Grad Plus loan program starting with the 2026-27 academic year.

The change is part of a broader effort to reduce federal lending and focus taxpayer subsidies on undergraduate 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 the current undergraduate limits. Once a student hits that ceiling, federal borrowing ends. 

Under current rules, graduate students could borrow up to the full cost of attendance through Grad PLUS, subject to a credit check but with no annual or aggregate cap.

For graduate and professional programs where tuition often exceeds $50,000 per year, the change creates an immediate funding gap. Law and medical students, in particular, face some of the highest education costs in the country, with total tuition and fees at private schools often surpassing $200,000. Without Grad PLUS, many students will be forced to turn to private loans with higher interest rates and fewer protections.

This also comes as America is facing a doctor shortage. Restricting access to these programs could further exacerbate the problem. 

What The New Graduate Students Limits Would Be

Under current rules, graduate and professional students can borrow up to the full cost of attendance through Grad PLUS loans. However, with Grad PLUS loans being eliminated, the only option will be Direct Loans for Graduate Students, which will get new limits for graduate and professional students.

From the bill, the new limits would be:

• Graduate Students (Master’s): $20,500 annually, $100,000 total limit.
• Professional Students (e.g., Law, Medicine): $50,000 annually, $200,000 total limit.

It's important to note that these limits are on top of undergraduate borrowing. If you're not certain if you're a graduate or professional student, here's a guide: Graduate vs. Professional for Student Loans.

There's also a grandfathering clause built into the Senate bill, which would allow borrowers who already have at least one Grad PLUS loan prior to June 30, 2026, to continue borrowing until the end of their program, or three academic years, which ever is first.

Graduate Program Access Could Be Restricted

If students can't pay for graduate school, they can't attend. This could restrict graduate programs to those who can already afford it - essentially making things like becoming a doctor only available to those in wealth families.

The bigger issue is in fields like education and social work, where starting salaries are often low, but promotions, and even state laws, require graduate degrees. For example, most states require their social workers to have a masters degree in order to do clinical work. 

In teaching, states like New York require a teacher to get a masters degree within 5 years of becoming a teacher... these requirements will be burdensome if students cannot get the financing they need to pay for these requirements.

Federal Lending May Shrink, Private Lending May Rise

The change aligns with other aspects in the bill that aim to shrink the size of the federal student loan portfolio. By reducing federal borrowing limits and eliminating loan types, policymakers are signaling a shift toward reducing federal support in higher education.

But in the short term, the change is expected to drive 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 the gap - simply because they're concerned about the risk.

It's important to note that private borrowing includes other challenges. For example, teachers and social workers cannot get private loans forgiven using programs like Public Service Loan Forgiveness (which they would normally be eligible for).

For doctors, who also may be eligible for PSLF, the average cost of medical school is $205,000. If the cap on Federal loans is $100,000 or $200,000, it means they'd have to privately finance the remaining amount beyond the cap. This would lead to higher costs, and no forgiveness on that portion of their debt.

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 repay their debt. But their loans balances are also significantly higher.

More Expensive Paths To Graduate Degrees

The phaseout of Grad PLUS loans would not affect current students immediately. Borrowers who have already received a Grad PLUS loan would continue to have access for up to three more academic years (at least under the current version of the bill). But students planning to start graduate school 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.

The bill’s supporters argue that limiting federal borrowing may push institutions to contain costs and reduce the overall burden of graduate debt. Opponents say it risks cutting off opportunity for students without financial support.

Going forward, students are going to need to think differently about their graduate school finances. 

Common Questions

What changes are proposed for Grad PLUS Loans?

Congress is ending Grad PLUS loans.

When would Grad PLUS Loans end for new borrowers?

Grad PLUS loans would end for the 2026-27 academic year, which starts July 1, 2026.

How will the elimination of Grad PLUS Loans affect graduate students’ ability to pay for school?

Grad PLUS currently allows borrowers to borrow up to the 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 impacted by these changes?

High cost programs like medical school, dental school, and law school would be the most impacted.

Why is Congress proposing to eliminate Grad PLUS Loans?

Congress is eliminating Grad PLUS loans because they are large balances relative to the number of borrowers.

How could these changes impact access to graduate education and certain careers?

Eliminating Grad PLUS Loans could limit access to graduate education and some careers, like medicine or law.

What is the timeline for these proposed changes to take effect?

The elimination of Grad PLUS loans would be for new new students after July 1, 2026.

What should prospective graduate students do to prepare for these changes?

There's not much to do to prepare. Current grad students will have a three year grace period to leverage the existing program. New students after July 1, 2026 would have to follow the new rules if they pass.

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