Grad PLUS Loans End July 2026

If you are planning to start or continue graduate school after June 30, 2026, the federal student loan program is about to look significantly different.

The One Big Beautiful Bill Act (OBBBA) was passed by Congress on July 3, 2025, and signed into law on July 4, 2025. Most of its student lending provisions take effect on July 1, 2026 — less than three months from now. The changes affect graduate students, professional students, and parents of undergraduates.¹

Grad PLUS Loans: What Is Ending

Under the current system, graduate and professional students can borrow up to the full cost of attendance through Grad PLUS loans. For law school, medical school, or MBA programs, that can mean $50,000 to $80,000 or more per year.

That option ends on July 1, 2026, for anyone taking out new federal loans after that date.²

In its place, the OBBBA establishes new annual and lifetime caps on Direct Unsubsidized Stafford Loans for graduate borrowers:

Borrower Type	Annual Limit	Lifetime Limit
Graduate students	$20,500	$100,000
Professional students (law, medicine, MBA)	$50,000	$200,000

For a medical student who currently relies on $60,000 or more per year in Grad PLUS funds, this creates a real financing gap. That gap needs to close with institutional aid, scholarships, or private loans — none of which carry the protections that federal loans do.

Parent PLUS: What the Cap Changes

Parent PLUS loans previously had no annual limit. Parents could borrow up to the full cost of attendance for each dependent student, regardless of amount.

Starting July 1, 2026, Parent PLUS loans are capped at $20,000 per year per dependent student, with a $65,000 lifetime cap per student.²

At schools where the total cost of attendance runs $65,000 to $85,000 per year, a $20,000 Parent PLUS loan covers roughly one-quarter of costs. The rest must come from savings, grants, institutional aid, or private borrowing.

Parents who borrowed Parent PLUS for a student before July 1, 2026, may continue under the current limits for up to three additional years — but only if the student remains continuously enrolled without interruption. A leave of absence or academic pause triggers the new caps immediately.

Are Existing Borrowers Protected?

Partially. The law includes grandfathering provisions, but they come with conditions.³

Grad PLUS grandfathering: Students whose Grad PLUS loan was disbursed — not just certified or originated — by June 30, 2026, for their current program may continue accessing Grad PLUS for up to three more years. The Department of Education has confirmed "disbursed" is the operative word.³

Parent PLUS grandfathering: Parents who borrowed before July 1, 2026, can continue under current limits for three years or until the student's program ends. Continuous enrollment is required.

The distinction between "disbursed" and "certified" matters practically: if your loan was approved but funds have not yet been released by June 30, 2026, you may not qualify for grandfathering.

New Repayment Options for New Borrowers

The OBBBA also simplifies repayment for borrowers taking out new loans on or after July 1, 2026. Two plans will be available:

1. A standard repayment plan with fixed monthly payments over a set term
2. The Repayment Assistance Plan (RAP) — payments calculated on a sliding scale from 1% to 10% of adjusted gross income

The income-driven plans currently available — SAVE, PAYE, and ICR — will be phased out for existing borrowers between 2026 and 2028, who will transition to RAP or an Amended IBR plan. Our income-driven repayment plans guide explains what those plans look like before they are retired.

What to Do Based on Your Situation

If you are a graduate student starting fall 2026: Contact your financial aid office now to confirm how your package is structured under the new limits. Ask specifically whether your funding assumes Grad PLUS availability. If it does, ask what replaces it. Do not wait until June.

If you are a prospective law, medical, or dental student: The funding model for your program just changed. Run the full cost projection using the new annual limits before committing to any program. Our guide to how to pay for graduate school covers federal and private alternatives.

If you are a parent planning to borrow: A $20,000 annual cap is far below what most high-cost schools require in total annual borrowing. Review the Parent PLUS loan guide to understand both the cap mechanics and the broader cost picture.

If you are an undergraduate: Your federal Direct Loan limits are not changing under the OBBBA. The $5,500–$7,500 annual limits for undergraduates remain in place. The $257,500 lifetime cap is the number to understand for the long term if you continue to graduate or professional school.

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For context on how these changes fit within the broader federal aid picture, see our guides to federal vs. private student loans and decoding your financial aid award letter. For the separate news about student loan oversight shifting to the Treasury Department, see our post on student loans moving to Treasury.

If you are still working through the FAFSA side of this, our FAFSA changes explainer covers what shifted in the simplification process.

Footnotes

1. U.S. Department of Education, Federal Student Aid. (2026, March 9). One Big Beautiful Bill Act FAFSA Processing Updates. Knowledge Center. https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2026-03-09/one-big-beautiful-bill-act-fafsa-processing-updates ↩

2. Harvard University Student Financial Services. (2025). Key Changes to Federal Student Loans Made in the Recent One Big Beautiful Bill Act. https://sfs.harvard.edu/2025-changes-federal-student-loans ↩ ↩²

3. National Association of Independent Colleges and Universities. (2025). Frequently Asked Questions About the One Big Beautiful Bill Act. https://www.naicu.edu/policy-advocacy/advocacy-resources/reconciliation-advocacy-center/frequently-asked-questions-about-the-one-big-beautiful-bill-act/ ↩ ↩²