New Federal Loan Cap Sparks Debate
A proposed new federal loan cap for graduate students in the U.S. is causing concern among law schools and students over rising costs. The debate highlights ongoing financial pressures on students, which can influence university decision-making on tuition and student support services.
- The new regulations, part of the One Big Beautiful Bill Act (OBBBA), will take effect on July 1, 2026, eliminating the federal Grad PLUS loan program for new borrowers. - Under the new rules, graduate students will have an annual federal loan limit of $20,500 and a total aggregate limit of $100,000. For students in professional programs like law and medicine, the annual cap is set at $50,000 with a total lifetime limit of $200,000. - A new lifetime borrowing cap of $257,500 will be implemented for all federal student loans combined, including undergraduate, graduate, and professional programs. - The Grad PLUS program, which is being eliminated, was established in 2005 and allowed graduate students to borrow up to the full cost of attendance, covering expenses beyond tuition and fees. More than 440,000 students utilize these loans annually. - The average cost for a law degree is over $217,000, and a medical degree can exceed $238,000, amounts significantly higher than the new $200,000 aggregate loan cap for professional students. - Concerns have been raised that the new caps will disproportionately affect lower-income students and could force more borrowers to seek private loans, which typically have higher interest rates and fewer borrower protections. - Students who have received a Grad PLUS loan before the July 1, 2026 deadline may be able to continue borrowing under the old rules for a limited time due to a "legacy provision". - The first federal student loans were established in 1958 through the National Defense Education Act, with borrowing extended to graduate students in 1981.
