US to End Unlimited Federal Student Loans

- The proposal would eliminate the Graduate PLUS loan program, which currently allows graduate and professional students to borrow up to the full cost of attendance. It also aims to place caps on the amount parents can borrow through the Parent PLUS program. - New annual borrowing limits would be established for graduate students, set at $20,500 for most graduate programs and $50,000 for professional degrees in fields like medicine, law, and dentistry. Aggregate loan limits would also be instituted at $100,000 for graduate students and $200,000 for professional students. - For students with disabilities, federal regulations allow for a higher cost of attendance calculation to include expenses for personal assistance, transportation, and specialized equipment. However, the new hard caps on loan amounts may not cover these expanded budgets, potentially creating a funding gap. - The federal government first began offering student loans in 1958 through the National Defense Education Act, a response to the Soviet Union's launch of Sputnik. The system was significantly expanded by the Higher Education Act of 1965 to promote greater access to college. - Total federal student loan debt has grown to over $1.6 trillion, more than double the amount from a decade ago. This increase is attributed to rising tuition costs and the availability of federal loans that could cover the full cost of attendance. - The proposed changes are part of a broader plan to simplify the loan repayment system, reducing the number of repayment plans to two main options: a tiered standard repayment plan and a new income-driven plan called the Repayment Assistance Plan (RAP). - These changes are slated to take effect for new borrowers starting July 1, 2026. Current borrowers would be grandfathered into the existing system, though some rules would apply if they take out new loans after the effective date. - Proponents argue the changes will force universities to lower tuition and will protect students from over-borrowing for degrees that may not have a high return on investment. Critics express concern that the new limits will disproportionately affect low-income and minority students, potentially forcing them to seek out less favorable private loans or forgo advanced degrees altogether.