Many Grad Students Unaware of Loan Changes

- Starting July 1, 2026, the federal Grad PLUS loan program will be eliminated for new borrowers. This program previously allowed graduate and professional students to borrow up to the full cost of attendance. Students who have taken out a Grad PLUS loan before this date may be able to continue borrowing under the old rules for up to three more years to complete their current program. - The One Big Beautiful Bill Act (OBBBA) establishes new annual and lifetime borrowing limits for graduate students, effective July 1, 2026. Most master's and doctoral programs will be capped at $20,500 per year with a $100,000 aggregate limit. A separate, higher limit of $50,000 annually and $200,000 total will apply to a shortlist of "professional" degrees, including medicine, law, and dentistry. - Many graduate programs in fields like nursing, physical therapy, counseling, and education will fall under the lower $100,000 lifetime borrowing cap. This has raised concerns about potential worker shortages in these high-demand professions. The changes are expected to impact approximately 370,000 students, who may need to turn to private loans to cover their educational costs. - The popular Saving on a Valuable Education (SAVE) income-driven repayment plan is being phased out. Due to a settlement agreement, new enrollments in the SAVE plan have been halted, and the plan will be eliminated for all borrowers by July 1, 2028, and possibly sooner. Current enrollees will be transitioned to a different repayment plan. - A new income-driven plan called the Repayment Assistance Plan (RAP) will become one of the primary options for new borrowers after July 1, 2026. Unlike the SAVE plan, which could result in a $0 monthly bill, the RAP will require a minimum payment of $10, regardless of income. - Under the RAP, loan forgiveness will be granted after 30 years of payments for all graduate borrowers, an increase from the 25-year timeline offered under the SAVE plan. However, the RAP does prevent loan balances from growing due to unpaid interest. - These changes are expected to shift a portion of the graduate student loan market from federal to private lenders. Some analysts are concerned this could lead to higher interest rates and less favorable repayment terms for students, particularly those without strong credit or a cosigner. State-based lending programs are exploring ways to help fill the potential funding gap.