Key Points
- Medical and veterinary students who should be grandfathered into pre-OBBBA borrowing limits are incorrectly receiving notices that they've hit the new caps.
- Schools with summer-start programs, including many medical, dental, and veterinary schools, are struggling to disburse federal loans on time because systems were rebuilt to accommodate One Big Beautiful Bill Act changes.
Over the past several weeks we've heard multiple reports from graduate students about financial aid delays and miscommunication as they start summer classes. For medical, dental, and veterinary schools that start as early as May, the One Big Beautiful Bill Act (OBBBA) changes are causing delays and chaos.
One student reported that they received an inaccurate notice claiming they hit the updated graduate borrowing limits, while another was experiencing delayed loan disbursements. The result is fear, uncertainty, and in the case of delayed disbursements, true financial risk as many graduate students rely on their student loans to pay rent, buy food, and more.
Here's what's happening.
Would you like to save this?
We'll email this article to you, so you can come back to it later!
A Compressed Timeline Created a National Bottleneck
The OBBBA made the largest set of changes to federal graduate borrowing in two decades. Grad PLUS loans will no longer be available to new borrowers as of July 1, 2026. A new $50,000 annual cap and $200,000 lifetime cap apply to professional programs including medicine, dentistry, and veterinary medicine. Graduate programs face a $100,000 lifetime cap, with only $20,500 per year limits.
The current problems aren't with the policy itself - it's the timeline schools were given to implement it.
"We're seeing the repercussions of the short timelines to implement the rules from OBBBA," said Karen McCarthy, vice president for public policy and federal relations at NASFAA. "Usually we have eight months — we'd have final rules by November 1 for a July 1 effective date. But this year was May 19, six weeks before July."
McCarthy added: "In some cases, there were students already enrolled in [graduate] programs, but we didn't even have the final rules yet. So schools couldn't even apply them."
Looking at the behind the scenes logistics, financial aid offices (and their technology vendors) have less than six weeks to rebuild systems, train staff, and create financial aid awards for hundreds of thousands of returning and incoming graduate students
Grandfathered Grad PLUS Students And Incorrect Caps
Some graduate students are being incorrectly flagged as being capped on graduate borrowing, despite being grandfathered in.
On April 26, ED launched updates to the FAFSA Partner Portal, the National Student Loan Data System (NSLDS), and the Common Origination and Disbursement (COD) System to implement OBBBA. The agency added a new "Loan Limit Exception" flag designed to identify borrowers grandfathered into pre-OBBBA limits.
However, by ED's own admission, that flag did not populate immediately. In an electronic announcement, Federal Student Aid stated the field would "display a null value" until NSLDS received a confirmation file from COD. NSLDS post-screening was paused for a week and did not resume until the weekend of May 3.
Any school pulling a student's NSLDS record during that window (or running financial aid software that referenced stale data) could see a grandfathered borrower appear as subject to the new caps. Schools with automated settings may have automatically sent notices, even when the student qualifies for the exception.
Why Early Loan Disbursements Have Been Impacted
Medical, dental, and veterinary schools usually start with a "summer header" semester - an academic year that begins in May or June.
However, because of these system updates, colleges were not able to submit loan documents and disbursement requests. The result is, student have been enrolled in school, but the college is still waiting on the loan disbursement.
For graduate students, this has a real impact. Many rely on financial aid refunds to cover qualifying non-direct expenses like rent, food, and supplies. Inside Higher Ed reported that UCLA's dental and medical schools committed to emergency funding for students caught in the gap.
For health professional graduate students, the cash crunch is immediate. First-year supply costs (stethoscopes, instruments, scrubs, textbooks, dissection kits, and required technology) can run $1,500 to $4,000 before classes begin. When loan disbursements miss the orientation window by even two weeks, students who budgeted around the federal disbursement schedule have to put supplies on credit cards or pull from emergency savings.
What This Means For Graduate Students
For households planning around graduate or professional school borrowing this year, the impact is real. Financial aid notifications may not reflect a student's actual borrowing eligibility. Disbursement timing may slip past tuition due dates, supply purchase windows, or move-in dates. Students may need to cover short-term costs out of pocket or through emergency lending.
McCarthy urged schools to absorb some of the strain rather than pass it to students: "Schools can help their students by not assessing late fees."
She was clearer on the undergraduate side. "For the undergraduate season, I don't see any major systemic problems. Everyone is playing catch-up, so the summer will be very, very busy."
Undergraduate borrowers should still not assume their accounts are immune. The same FAFSA updates power undergraduate aid, and manual workarounds increase the chance of errors anywhere in the system.
Don't Miss These Other Stories:
Editor: Colin Graves
Robert Farrington is the founder of The College Investor and is widely recognized as one of the nation’s leading voices on student loan debt and saving for college. He holds an MBA from UC San Diego Rady School of Management and has spent over 15 years researching, writing, and advising on student loans, 529 plans, financial aid programs, and saving and investing for young professionals.
Robert has been featured in the The New York Times, The Wall Street Journal, The Washington Post, NBC News, and Forbes, where he has been a regular personal finance contributor for over a decade. His work combines both professional expertise and personal experience – he successfully navigated his own student loan repayment journey and has helped thousands of readers do the same.
He is committed to making the intersection of personal finance and education transparent and accessible. You can learn more about Robert on the About Page or on his personal site RobertFarrington.com.