Federal Student Loan Shake-Up: New Borrowing Caps Could Change Graduate Education Forever

A new federal law is set to reshape how students pay for advanced degrees and it could make graduate school far less affordable for many.

This fall, millions of students are already worried about rising tuition.

But the end of the Grad PLUS loan program brings a major shift in federal student aid, capping how much future borrowers can take out.

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What’s Changing: Grad PLUS Loans Are Ending

Under the One Big Beautiful Bill Act, signed into law this summer, unlimited Grad PLUS loans will be phased out starting next year.

Here’s what the new borrowing structure looks like:

• Graduate students in law or medicine → Up to $200,000 total

• Graduate students in other academic fields → Up to $100,000 total

• Combined undergraduate + graduate lifetime borrowing cap → $257,500 per student

• Current borrowers → 3-year transition period before the new rules apply

Previously, Grad PLUS loans allowed students to borrow the full cost of tuition and living expenses, with no set limit.

Why This Matters: Tuition Is Higher Than the New Caps

On paper, $257,500 may sound generous. But the real cost of higher education tells another story:

• Average undergraduate program (4 years): $100,000–$224,000

• Law school: $132,000–$168,000

• Medical school: Up to $363,000

This means many students, especially those pursuing professional degrees, will face funding gaps they’ll need to cover through private loans or personal savings.

Who’s Hit Hardest: Equity and Access Concerns

The policy could deepen disparities in graduate education. Data shows:

• Nearly 50% of Black graduate students borrow federal loans

• Only 17% of white graduate students borrow at the same level

With fewer federal borrowing options, low- and middle-income students may be priced out of top programs, particularly in fields like law, medicine, and STEM where advanced degrees are essential.

What Students Can Do Next

While the changes are significant, students still have options to explore:

• Scholarships & grants — often underused but crucial for filling funding gaps

• Work-study programs — to offset living costs

• Employer tuition assistance — increasingly common in healthcare, law, and tech

• Income-driven repayment plans — for those who borrow under the new system

• Federal forgiveness programs, such as Public Service Loan Forgiveness, may still apply for qualifying graduates.

Tip: If you’re planning for graduate school, start exploring scholarships, assistantships, and alternative funding options early to minimize future debt.

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