The Department of Education released a new regulation today that sets federal loan borrowing limits on postgraduate degrees and changes student repayment options.
Beginning in July, the department will eliminate Grad PLUS loans, which allowed students to borrow up to a school’s cost of attendance (including housing, food and transportation) after other forms of financial aid were exhausted.
The ruling provides an exception for currently enrolled students already receiving Grad PLUS loans, according to the final rule package.
Moving forward, the department has created a two-tier system that determines the federal loan limit for postgraduate programs. Students pursuing a “professional” degree can borrow $50,000 per year, or up to $200,000 in total. All other programs are considered “graduate” degrees, which provide $20,500 a year, or up to $100,000.
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The eleven professional degrees are pharmacy, dentistry, veterinary medicine, chiropractic, law, medicine, optometry, osteopathic medicine, podiatry, theology and clinical psychology.
Graduate school loans make up roughly $125 billion of the $1.7 trillion federal student loan portfolio. The total balance has ballooned by 343% over the past two decades, according to figures provided in the department’s announcement.
Furthermore, 40% of master’s programs do not provide a return on investment, according to the Foundation for Research on Equal Opportunity.
Federal officials contend that capping federal loans will force colleges to curb rising tuition costs. “The Trump Administration is focused on putting students and taxpayers first, which is why we are implementing durable policies to make higher education more affordable,” said Under Secretary of Education Nicholas Kent.
The administration is also establishing two student loan repayment plans. One income-driven plan aims to stop runaway interest from creating larger loan balances than what students initially start with.
The new regulation was initiated by President Trump’s Working Families Tax Cuts Act, part of the larger One Big Beautiful Bill, which he signed last July.
This marks the latest changes to the student loan system. In March, a federal court struck down SAVE, a Biden-era repayment plan. The Trump administration has also limited loan forgiveness and income-driven repayment plans to borrowers working in public service.
