Graduate student loans from the federal government are now capped, and private lenders say borrowers are turning to them in large numbers, according to an Associated Press report published Friday.
The caps come from a 2025 federal law that Donald Trump and congressional Republicans call the Big Beautiful Bill. Under the Education Department’s final rule, most provisions of which took effect July 1, students in programs the department labels professional, such as medicine, law and dentistry, can borrow up to $50,000 a year and $200,000 in total. Students in all other graduate programs can borrow up to $20,500 a year and $100,000 in total. A new lifetime limit of $257,500 applies to federal student loans overall. Parents who borrow through Parent PLUS loans, a federal loan for parents of undergraduates, are limited to $20,000 a year and $65,000 per student, according to a University of Washington summary of the changes. Grad PLUS loans, which used to let graduate students borrow up to the full cost of their degree, have been eliminated for most new borrowers.
Which programs count as professional ended up in court. A court order on June 24 put the Education Department’s narrower list on hold, and the department added 18 programs to its list on June 29, according to the University of Washington. The AP reported that nursing, physical therapy and several other fields qualify for the higher amounts for now. The university’s summary says the department has said it will appeal.
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Private lenders are feeling the shift in graduate student loans. SoFi reported $2.9 billion in student loan originations, meaning new loans issued, in the third quarter, nearly double the same period a year earlier. Sallie Mae, which the AP says controls more than half of the private student loan market, reported graduate loans up 119 percent from a year ago. South Carolina Student Loan said its graduate borrowing is up 400 percent this year.
An American University analysis estimates that once the changes are fully phased in, more than half a million borrowers will need to find an extra $20,000 a year from sources other than the federal government, said Jordan Matsudaira, director of the Postsecondary Education & Economics Research Center. Steven Freedman, associate dean of admissions at the University of Kansas School of Law, told the AP, “Now, frankly, private banks get to choose who goes to law school.” The school has approved eight loans from its new program so far. Anastacia Dillon, associate vice president for financial aid at Lewis & Clark College, called the changes “really disruptive.” Dr. Robert Harrington, dean of Weill Cornell Medicine, questioned whether medical programs are becoming the territory of people whose families can afford the bill.
The Trump administration has said the limits will curb “excessive borrowing” and push schools to look hard at what their programs cost, the AP reported. The American Enterprise Institute counts at least 40 schools that have cut the price of some programs. Marc Schoonover, general manager of the lender ELFI, said the number of students who truly cannot find a financing option is “a lot smaller than many initially feared.”
The AP did not describe any further scheduled steps in the policy. The appeal over the professional degree list is the main open question, and it will decide how many fields get the higher federal limits. Students and families weighing graduate student loans can confirm their own limits with the school’s financial aid office and the Education Department’s Federal Student Aid office.
