The elimination of the federal Grad PLUS loan program will take effect on July 1, 2026, replaced by new caps that limit graduate student federal borrowing to $20,500 per year for most degrees and $50,000 for professional degrees [1]. These limits were enacted under President Donald Trump's "One Big Beautiful Bill Act," which aimed to address steep graduate tuition increases by restricting unrestricted federal borrowing [1].
As a result, many graduate students are expected to turn to private student loans to cover costs beyond the new federal caps [1]. Currently, students borrow around $10 billion annually from private lenders [1]. Mark Kantrowitz, a student loan expert, estimates private loan volume could double following the federal changes, stating, "I estimate that private student loan volume may double due to the loan limit changes" [1].
However, private student loans generally carry higher costs and greater risk for borrowers compared to federal loans. Anna Anderson expressed concerns that "the loans will be expensive and higher risk for borrowers" [1]. Furthermore, private lenders often impose strict credit and income requirements. Many require a minimum credit score of 670 and an income of $35,000 or more to qualify [1]. Kantrowitz noted, "Private student loans are credit-underwritten" and such standards could exclude a large portion of borrowers [1].
Data suggests over 40% of Americans would likely be denied private student loans by traditional prime lenders due to these underwriting criteria [1]. Carolina Rodriguez warned, "We cannot assume the private market will step in to fill federal loan gaps. That reality will directly impact who can afford to enter critical professions" [1].
The new federal loan caps take effect on July 1, 2026, ending the availability of Grad PLUS loans and limiting graduate students’ access to federal borrowing beyond $20,500 or $50,000 annually depending on degree type [1].
