New Borrowing Rules Will Impact Graduate Students Starting July 1

The Department of Education finalized changed borrowing limits for graduate and professional students starting on July 1, 2026. Borrowers planning to start a graduate program will be more heavily impacted than those who are currently enrolled. There are also different limits between graduate education and professional education. It’s important to understand how these new rules will impact your federal funding options.

Borrowers enrolling in a graduate program July 1st or later

New graduate and professional students will soon see changes to their federal funding options, as the Department of Education sets borrowing limits on unsubsidized loans and eliminates the Grad PLUS program completely.

For the past twenty years, the Grad PLUS program has expanded access to graduate education by essentially allowing students to borrow up to their school’s total cost of attendance. Starting July 1st, students facing a shortfall in funding their program will no longer be able to turn to Grad PLUS loans to fill that gap.

The new borrowing limits will impact students differently, depending on whether they’re considered a graduate student or a professional student.

• Graduate students can borrow up to $20,500 per year with a lifetime limit of $100,000

• Professional students can borrow up to $50,000 per year with a lifetime limit of $200,000

The cost of many graduate and professional programs exceed these limits; some students will need to explore alternatives for funding their education, such as scholarships, employer-based tuition assistance programs, or private student loans.

What’s the difference between a graduate student and a professional student?

You’re considered a graduate student if you’re enrolled in a post-baccalaureate program that awards a graduate credential (excluding professional degrees). For example: a master’s degree in nursing, education, or accounting would be considered a graduate degree.

To meet the Department of Education’s definition of a professional student, you must be enrolled in one of the following programs that the awards a professional degree:

• Chiropractic

• Clinical Psychology

• Dentistry

• Law

• Medicine

• Optometry

• Osteopathic Medicine

• Pharmacy

• Podiatry

• Theology

• Veterinary Medicine

What about borrowers who have already started a graduate program?

It’s likely that you won’t be impacted by the new borrowing limits.

You’ll qualify for an exception from the new limits if you’re already enrolled in a graduate or professional program and you’ve borrowed at least one Direct loan for that program prior to July 1, 2026.

As long as you continue to remain enrolled in the same program at the same school (without any breaks in your enrollment), you can continue to borrow based on the old limits until you complete your program, or for up to three years, whichever is less.

The importance of planning ahead

If you’re thinking about enrolling in a graduate program, it’s critical to start planning early, as you may need to be more strategic in funding your education goals.

Start by exploring the cost of different schools that offer the program you’re interested in. Then compare that cost to the maximum amount you can receive in federal student loans ($20,500/year for graduate programs and $50,000/year for professional programs).

If you have a funding shortfall, make a plan for how you’ll make up that difference. That may mean:

• Applying for scholarships to chip away at the total cost

• Reaching out to your employer’s HR team to see if your company offers a tuition assistance program

• Waiting to start your program until you’ve saved enough money

If you need additional funding, you can compare your options for private student loans. Private loans often carry higher interest rates compared to federal loans and have less flexible repayment options, so it’s best to only borrow an amount you can afford to repay. Be sure to compare a number of different private lenders, and look for what they offer for interest rates, repayment terms, and deferment or forbearance options.

Unlike with federal loans, you may need a co-signer to qualify for a private student loan, depending on your income and credit score.

Private lenders will pull a copy of your credit report, so it’s a good idea to review your credit report before you apply to make sure the reporting is accurate and your accounts are all up-to-date. You can review your credit report for free each year at annualcreditreport.com.

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