Starting July 1, 2026, new federal borrowing caps and the end of Grad PLUS loans reshape how millions of Americans pay for graduate and professional school. Here’s exactly what changed.
Starting today, the federal student loan system that generations of graduate and professional students relied on is officially gone. Under the One Big Beautiful Bill Act, the federal Grad PLUS loan program — which let graduate students borrow up to their full cost of attendance — has been eliminated for new borrowers.
In its place: hard annual and lifetime caps. New graduate student borrowers are now limited to $20,500 per year with a $100,000 lifetime cap; professional students (think law, medical and dental school) can borrow up to $50,000 per year with a $200,000 lifetime cap. Parent PLUS loans, which parents use to help pay for their kids’ undergraduate education, are now capped at $20,000 per year and $65,000 per child over a lifetime — down from the previous no-cap system. There’s also a new combined lifetime federal borrowing limit of $257,500 across all loan types.
There is a carve-out: students who already had a federal loan disbursed for their current program before today can keep borrowing under the old rules for up to three more years, or until they finish their program, whichever comes first. Everyone else — including anyone starting a brand-new graduate or professional program this fall — falls under the new, lower ceilings.
The practical impact is significant. Costly graduate programs that previously relied on students covering the gap with federal Grad PLUS loans will now push many borrowers toward private lenders, which typically carry higher interest rates and fewer consumer protections like income-driven repayment or Public Service Loan Forgiveness. The Department of Education has also rolled out a new simplified repayment option, called the Repayment Assistance Plan, alongside a revised standard plan, replacing the patchwork of income-driven plans built up over the past two administrations.
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