Overview:
The U.S. Department of Education finalized new loan caps for postbaccalaureate students Thursday, limiting graduate and professional students and parents borrowing on behalf of their children to annual and aggregate loan amounts effective July 1.
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The U.S. Department of Education finalized new loan caps for postbaccalaureate students Thursday, limiting graduate and professional students and parents borrowing on behalf of their children to annual and aggregate loan amounts effective July 1.
Congress passed the loan caps last summer as part of the One Big Beautiful Bill Act. That legislation eliminated the 20-year-old federal Grad PLUS loan program, which provided potentially tens of thousands of dollars in additional loans to graduate students to cover room, board and other expenses.
Thursday’s announcement is the last step in the department’s rule-making process. It clarifies the distinction between graduate students and professional students and creates borrowing caps for both categories.
Professional students, who have access to higher amounts of federal loans, are studying in 11 fields: pharmacy, dentistry, veterinary medicine, chiropractic, law, medicine, optometry, osteopathic medicine, podiatry, theology and clinical psychology. Federal loans for these students will be capped at $50,000 a year and $200,000 in total.
Students in other graduate programs will have access to $20,500 per year and $100,000 in total.
For parents borrowing federal Parent PLUS loans on behalf of their children to attend undergraduate college programs, new rules limit loan amounts to $20,000 a year with a $65,000 lifetime cap per dependent. Also, parents will not be able to consolidate Parent PLUS loans and pay them back as a percentage of their income.
The department said the new rules are part of an effort to reform higher education by introducing “commonsense limits and guardrails on borrowing, and helping borrowers enter and remain in repayment.”
Limiting borrowing will have a positive effect on the cost of attending graduate school, the Education Department said.
“Unrestricted borrowing has enabled institutions to raise tuition and fees without sufficient constraint, contributing to rising student loan debt,” according to the announcement. “In many cases, students have taken on substantial debt for programs with minimal or negative return on investment, while institutions have had limited incentives and tools to prevent overborrowing or to curb excessive debt accumulation.”
According to Inside Higher Education, critics say the consequence of the loan caps is that students will no longer be able to finance key high-cost, high-demand degrees — many of which involve health care. As a result, enrollment in those programs will decline and the nation could soon face a shortage of nurse practitioners, physical and occupational therapists, audiologists and more, critics say.
Other non-health care-related degrees affected include education and social work, according to Inside Higher Education.
