Trump administration finalizes federal student loan caps
Ministry of Education On Thursday, the student loan overhaul introduced in President Donald Trump’s “big, beautiful bill” also known as the Working Families Tax Cuts Act signed in July was completed.
final regulations New borrowing limits are included on federal student loans for graduate and professional degrees, starting with loans taken out on July 1, 2026.
Students will be able to borrow up to $20,500 per year and $100,000 in total for graduate programs, while students in professional programs such as medicine and law will be able to borrow up to $50,000 per year and $200,000 throughout their studies. Previously, the annual limit for loans for graduate and professional programs was $20,500 and the lifetime limit was $138,500.
The regulations also eliminate the graduate PLUS loan program, which previously allowed students to receive loans up to the full cost of attendance regardless of undergraduate program.
“This final rule will help ensure students can access higher education without incurring excessive loan debt, provide repayment options that better serve borrowers, and force institutions to reduce costs,” Undersecretary of Education Nicholas Kent said in a speech. Press release.
Despite objections from professional organizations, academic institutions, and other stakeholders, the administration limited the definition of professional degrees to only 11 doctoral programs:
- Pharmacy (D. of Pharmacy)
- Doctorate in dentistry (DDS or DMS)
- Veterinary Medicine (DVM)
- Chiropractic (DC or DCM)
- Law (LLB or JD)
- Medicine (MD)
- Optometry (OD)
- Osteopathic medicine (DO)
- Podiatry (DPM, DP or Pod.D.)
- Theology (M.Div. or MHL)
- Clinical psychology (Psy.D. or Ph.D.)
Since the legislation was adopted in July, the final rule has gone through the negotiated rulemaking process to be finalized. The process included a public comment period in which many stakeholders expressed concerns about the definition of professional degree that excludes programs such as social work, physical therapy and nursing.
Clinical psychology was not included in the original rule proposal but was added during the negotiated rulemaking process.
What do the new credit limits mean for borrowers?
Students who are currently enrolled in graduate and professional programs and have taken out loans, including grad PLUS loans, to pay for their education are exempt from the new loan limits for up to three years.
The new rule also imposes a total lifetime loan limit of $257,500, which includes undergraduate loans. some grad PLUS loans. Borrowers who remain eligible for grad PLUS loans by remaining continuously enrolled in their program will not be subject to the new aggregate limit during their exemption period of up to three years or their expected qualification period, whichever is shorter.
Students taking out loans for the first time after July 1 will want to be aware of their loan limits when deciding what course of study to pursue and where to study. Financial aid and scholarships for graduate students are still available, but generally to a lesser extent than for undergraduates, says Robert Farrington, personal finance expert and founder of The College Investor.
Many graduate students rely on loans to finance their education, he says, so loan limits can make it difficult for students in some programs to cover their expenses with federal loans alone.
Despite the changes, federal loans are still “the best way to go,” Farrington says. Although an income-based repayment plan is not available for new federal borrowers under the new rule, they will have access to a new income-based repayment plan and forgiveness opportunities through Public Service Loan Forgiveness.
If you exceed the federal loan limits and take out private loans, they don’t have forgiveness options like “private loans” do. [PSLF]So it inherently becomes more expensive,” says Farrington.
Unlike federal student loans, private student loans may have credit history or income requirements that can make it difficult for some potential borrowers to get approved. Additionally, borrowers may be subject to variable interest rates on private loans as opposed to the fixed rates that come with federal student loans.
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