UPDATED
Spending act restricts federal loans for grad students
The “big, beautiful bill” that President Donald Trump signed into law on July 4 caps how much money grad students can borrow from the federal government.
Federal loans are now capped at $100,000 for graduate students and $200,000 for students seeking a doctoral, medical or professional degree.
What’s more, the new law also phases out the Grad PLUS loan program, which had offered unlimited unsubsidized loans to graduate students. Beginning in July 2026, students can no longer apply for the loans, but current borrowers are grandfathered in.
Critics contend the changes mean higher payments and fewer choices for students, but the Trump administration bills it as a way to stop soaring tuition costs and increase accountability.
Since the Grad PLUS program has been implemented, the number of Americans receiving postgraduate degrees has doubled, according to an article on Inside Higher Ed.
The implementation of the Grad PLUS program led to universities expanding their graduate programs and creating new programs, Robert Kelchen, a professor of educational leadership and policy studies at the University of Tennessee, told Inside Higher Ed.
“Republican lawmakers who support restricting federal graduate loans argue that their availability has incentivized colleges to hike graduate tuition rates and overenroll programs with poor earnings outcomes for students,” the outlet reported.
Beth Akers, a senior fellow at the right-leaning American Enterprise Institute, said limiting federal grad loans is a good idea, that they are “horribly expensive for taxpayers.”
What’s more, “I’m very concerned we are subsidizing debt to people who will not be able to afford to repay it,” she said, adding often grad loans are not “a sound investment.”
“We have the data to back that up,” Akers said in a meeting with reporters in Washington D.C. prior to the bill’s passage.
In contrast, Akers said private loans, which are a viable option, offer a “correction” the nation needs to take. She said the private sector will be more careful in delving out loans to those who can most likely pay them back.
Sandy Baum, a nonresident senior fellow at Urban Institute, told Inside Higher Ed there “are lots of master’s degrees programs that just don’t pay off very well. If we narrow access to some of those programs, that’s not so terrible.” Having unlimited borrowing is “not optimal” if it urges students to go into debt to get a master’s degree in a field like gender studies, she said.
Barbara Coward, founder of MBA 360 Admissions Consulting, told The College Fix the law will “force higher education institutions to take a hard look at their cost structure and make some difficult decisions.”
“Does a master’s degree have to be more than $100,000? Or a medical, doctoral, or professional need to be more than $200,000? There are opportunities to lower the sticker price to match the new student loan caps without sacrificing academic outcomes,” Coward said via email.
But others point out getting an advanced degree isn’t cheap.
“Medical school may be impossible for these students at a time when we need more doctors,” Jon Fansmith, a senior official at the American Council on Education, told the New York Times.
The National Association of Graduate-Professional Students and Council for Graduate Students did not respond to The College Fix’s requests for comment.
Editor’s note: The article was amended after publication to include a comment from Barbara Coward.
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