Grad PLUS Loans End July 1 with New Caps

Starting July 1, 2026, the federal Grad PLUS loan program is eliminated for new borrowers. Graduate students will be capped at $20,500 per year ($100,000 lifetime) in federal loans. Students in 11 qualifying professional programs — law, medicine, dentistry, and others — can borrow up to $50,000 per year ($200,000 lifetime). If your program costs exceed those caps, you will need to find another source for the difference. One exception: students already enrolled and borrowing as of June 30, 2026 keep their current limits for up to three more years.

For years, Grad PLUS loans let graduate and professional students borrow up to the full cost of attendance with no annual cap. That changes in 65 days.

The One Big Beautiful Bill Act, signed into law in July 2025, eliminates Grad PLUS for new borrowers effective July 1, 2026, and replaces the old system with fixed annual and lifetime borrowing limits.1 For many students planning to start graduate or professional school this fall, the math is about to get significantly harder.

What the New Caps Are

The federal government has divided graduate programs into two categories for borrowing purposes.

Standard graduate programs — including MBA, public health, social work, education, and most master's and doctoral degrees — are capped at $20,500 per year and $100,000 lifetime in federal unsubsidized loans.1

Professional programs — a specific list of 11 fields — qualify for a higher cap of $50,000 per year and $200,000 lifetime. Those 11 fields are: law, medicine, dentistry, pharmacy, veterinary medicine, optometry, osteopathic medicine, podiatry, chiropractic, theology, and clinical psychology.2

One significant detail: MBA programs are not on the professional list. A student pursuing a full-time MBA at a private school where tuition alone can exceed $75,000 per year will be limited to $20,500 in federal loans — a gap that would need to be covered by private loans, savings, or employer assistance.

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Where the Gap Is Widest: Medical School

The new professional program cap creates the most pressure in medical school, where costs routinely exceed $50,000 per year by a wide margin.

According to the Association of American Medical Colleges, median annual tuition and fees for the 2025–2026 academic year were $42,648 at public medical schools and $74,661 at private medical schools.3 Add room, board, and living expenses and the total cost of attendance at many schools pushes well above $80,000 per year.

With the new $50,000 federal cap, a medical student at a private school could face a funding gap of $30,000 or more per year — roughly $120,000 over a four-year program. The average medical school graduate already carries about $247,000 in student debt.3 These caps do not reduce that number; they shift where the money comes from, pushing more students toward private lenders.

If you are planning to start a professional or graduate program in fall 2026 and assumed federal loans would cover your full cost of attendance, recalculate now. The gap between your program's cost and the new federal cap is real money you will need to find elsewhere — likely through private lenders at higher interest rates.

Dental school students face the same math. The four-year cost of attendance at many dental schools runs $350,000 to $400,000. The $200,000 lifetime federal cap leaves a six-figure shortfall for students who rely primarily on federal aid.

Who Is Exempt: The Legacy Provision

Students already enrolled in a graduate or professional program who received a federal loan before July 1, 2026 are exempt from the new caps under a legacy provision. They can continue borrowing at current rates for up to three more years, or until they complete their program, whichever comes first.1

This means:

  • Rising second-year medical students who borrowed last year are protected.
  • Students starting a new program in fall 2026 are not protected, even if they previously attended graduate school.
  • Students who took a gap year and are returning to a program in fall 2026 need to verify their eligibility carefully with their financial aid office.

If you have not yet started your program, check whether your school has institutional loan programs, school-based emergency funds, or partnerships with credit unions that offer rates below the private market. Many medical and law schools have expanded these options specifically in response to the federal cap changes.

Parent PLUS Loans Are Also Capped

The same legislation also introduced new limits for Parent PLUS loans. Starting July 1, parents can borrow no more than $20,000 per year per student, with a $65,000 lifetime limit per student.1 This affects families with undergraduate students as well as parents who planned to use PLUS loans to help pay for a dependent's professional school.

What Graduate-Bound Students Should Do Now

If you are starting a graduate or professional program this fall, there are four steps worth taking before July 1:

  1. Request your financial aid package now and ask your financial aid office exactly how the new caps affect your annual award. Get the real number.
  2. Compare private lenders for any gap amount. Private rates vary significantly — shop at least three. Federal vs. private student loan differences matter when you're borrowing $30,000 a year.
  3. Review your program's actual cost of attendance, not just tuition. Health insurance, fees, and living costs are often larger than students expect. Our guide to how much student debt is too much has the framework to think through this.
  4. Look at employer tuition benefits if you are in a field where working while in school is feasible. Some hospitals, law firms, and graduate employers offer partial funding for students who commit to post-graduation employment.

For current graduate students, see our overview of income-driven repayment plans and student loan forgiveness programs to understand repayment options for federal loans you've already taken.

If you are still weighing whether graduate school makes financial sense, read how to pay for graduate school and review student loan debt by major to see where return on investment is strongest.

July 1 is not far off. Students who plan ahead now will have more options than those who discover the gap after accepting an offer.

Footnotes

  1. U.S. Department of Education. (2026, April 24). One Big Beautiful Bill Act NSLDS Eligibility Processing Updates. Federal Student Aid Knowledge Center. https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2026-04-24/one-big-beautiful-bill-act-nslds-eligibility-processing-updates ↩ ↩2 ↩3 ↩4

  2. MIT Career Advising & Professional Development. (2026). Federal loan changes coming in Fall 2026: Considerations for graduate, medical, and professional school. https://capd.mit.edu/resources/federal-loan-changes-coming-in-fall-2026-considerations-for-graduate-medical-and-professional-school/ ↩

  3. Association of American Medical Colleges. (2026). You Can Afford Medical School. https://students-residents.aamc.org/financial-aid-resources/you-can-afford-medical-school ↩ ↩2