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If you’re a prospective graduate student or the parent of a college student, recent changes to the federal student loan program could significantly affect how you pay for higher education. As of July 1, 2026, the Grad PLUS loan program has been eliminated for new borrowers, and Parent PLUS loans are now subject to annual and lifetime borrowing limits. These changes, enacted under the One Big Beautiful Bill Act (OBBBA), reshape how graduate students and families can finance college and graduate school.
Here’s what has changed, who is affected, and how to prepare if you’re planning to borrow to help pay for higher education.
Key Points
• The federal Grad PLUS loan program has been eliminated for all new borrowers effective July 1, 2026.
• Federal Parent PLUS loans are now subject to new annual and lifetime borrowing limits per student.
• Aggregate borrowing limits for Federal Direct Unsubsidized Loans have been reduced to $100,000 for standard graduate students.
• Federal borrowing limits now differ between professional degree programs and non-professional graduate programs.
• Students and families may need to utilize alternative funding sources like scholarships, grants, or private loans to cover expenses that exceed the new federal caps.
Grad PLUS Loans: What’s Changed?
A Grad PLUS loan (officially known as a Direct PLUS Loan for Graduate or Professional Students) was a federal loan that allowed graduate and professional students to borrow up to their school’s full cost of attendance, minus any financial aid they had already received.
Originally introduced in 2006, the program became a major source of funding for students attending higher-cost graduate and professional programs. As of mid-2026, approximately 1.9 million borrowers owe about $130 billion in outstanding Grad PLUS Loans.
What Changed?
The Grad PLUS Loan program has been eliminated for new borrowers.
For students pursuing expensive graduate degrees, financing school may now require combining Federal Direct Unsubsidized Loans with scholarships, employer benefits, savings, payments plans, or private student loans.
What if I Already Have a Grad PLUS Loan?
If you received a Grad PLUS Loan before July 1, 2026, your existing loans remain unchanged. Eligible borrowers can continue borrowing under the previous rules for up to three years or until they complete their current academic program, whichever comes first.
However, if you withdraw from your program or enroll in a different graduate program you generally lose eligibility to continue borrowing Grad PLUS Loans and must follow the new federal borrowing rules.
What if I’m Thinking About Going to Graduate School?
Graduate students can still borrow Federal Direct Unsubsidized Loans, but those loans have stricter borrowing limits and may not be sufficient to pay for graduate school.
Before committing to a graduate program, it’s important to review the total cost of attendance, understand the federal loan limits that apply to your degree, and estimate whether you’ll have a funding gap. Planning ahead can help you identify additional funding sources before classes begin.
Recommended: Guide to FAFSA for Grad School
Federal Direct Unsubsidized Loan Changes
Although Grad PLUS loans are no longer available to new borrowers, the Department of Education continues to offer Direct Unsubsidized Loans to graduate students.
Graduate students can still borrow up to $20,500 annually through Direct Unsubsidized Loans, but the aggregate borrowing limit has been reduced from $138,500 to $100,000.
Students enrolled in qualifying professional degree programs — such as medicine or law — receive higher borrowing limits. They may borrow up to $50,000 annually through Direct Unsubsidized Loans and have a $200,000 aggregate limit.
OBBBA also established a lifetime federal student loan limit of $257,500 across all undergraduate and graduate borrowing.
Professional vs Non-Professional Graduate Programs
The Department of Education now divides post-baccalaureate programs into two categories: professional and graduate.
Profession degree programs receive higher federal borrowing limits because they often have significantly higher tuition costs. Even so, these limits remain below what many students previously financed through Grad PLUS loans.
Professional Degree Graduate Programs
The Department of Education defines a professional student as someone enrolled in a program that awards a professional degree upon completion.
Examples include:
• Dentistry (D.D.S. or D.M.D.)
• Veterinary Medicine (D.V.M.)
• Chiropractic (DC or DCM)
• Optometry (O.D.)
• Osteopathic Medicine (D.O.)
• Podiatry (D.P.M, D.P., or Pod.D.)
• Theology (M.Div. or M.H.L.)
• Clinical Psychology (Psy.D. or Ph.D.)
Non-Professional Degree Graduate Programs
Graduate students are those that are enrolled in master’s, research doctoral, or other graduate-level programs that do not lead to the professional degrees recognized by the Department of Education.
These students remain subject to the lower Direct Unsubsidized Loan borrowing limits.
Private Loans Can Help Cover Graduate School Costs
With the elimination of Grad PLUS loans, some graduate students may discover that federal student loans no longer cover their full cost of attendance.
Private graduate student loans offered by banks, credit unions, and online lenders, may help fill that gap. Depending on the lender, borrowers may be able to finance up to the school’s full cost of attendance minus any financial aid received. Loan proceeds can generally be used for tuition, fees, books, housing, transportation, and other education-related expenses. Some lenders also offer loans designed specifically for medical school, law school, MBA programs, and other graduate degrees.
Unlike most federal student loans, private lenders typically evaluate your credit when determining eligibility. Borrowers with stronger credit profiles generally qualify for the most competitive interest rates, while students who don’t qualify on their own may benefit from applying with a creditworthy cosigner.
Because private student loans may carry higher rates and don’t offer federal benefits (like income-driven repayment or loan forgiveness programs), it’s generally wise to maximize your federal aid before turning to private lenders.
Recommended: Private Student Loans Guide
Parent PLUS Loans: What’s Changed?
Parent PLUS Loans are federal education loans issued to the parents of dependent undergraduate students. OBBBA significantly changed Parent PLUS Loans by implementing new borrowing caps.
Federal Parent PLUS Loan Changes: Before and After July 2026
Before July 1, 2026, Parent PLUS Loans allowed parents of undergraduate students to borrow up to the school’s full cost of attendance after subtracting other financial aid.
As of July 1, 2026, Parent PLUS Loans are subject to an annual borrowing limit of $20,000 and an aggregate borrowing limit of $65,000 per student.
Parents who borrowed Parent PLUS Loans before July 1, 2026 may continue borrowing under the previous rules for up to three years or until their child’s academic program ends, whichever occurs first.
Like before, Parent PLUS Loans still require a credit check. While there is no minimum credit score requirement, the Department of Education reviews applicants for adverse credit history, including bankruptcy, foreclosure, loan default, and certain delinquent debts.
Exploring Alternatives to Federal PLUS Loans
Since PLUS loans may no longer cover the full cost of attendance, students and families may want to consider other funding sources.
• Scholarships: Scholarships are typically awarded based on academic achievement, athletic ability, artistic talent, field of study, military affiliation, community involvement, and other eligibility criteria. Unlike loans, scholarships generally do not need to be repaid. Your school’s financial aid office and reputable search websites are good places to begin your search.
• Grants: Grants are usually awarded based on financial need and generally do not require repayment. Federal, state, and institutional grants typically require students to complete the Free Application for Federal Student Aid (FAFSA).
• Fellowships and assistantships: Common in graduate school, fellowships and assistantships can substantially reduce education costs. Fellowships often provide tuition assistance and living stipends, while assistantships allow students to work part time in teaching or research positions in exchange for tuition benefits and compensation.
• Work-study programs: Federal Work-study provides eligible undergraduate and graduate students with part-time jobs that help offset education expenses while they’re enrolled in school.
• Employer tuition assistance: Many employers help employees pay for graduate education, professional certifications, or continuing education through tuition reimbursement or direct payment programs.
• School payment plans: Colleges often allow families to spread tuition payments over several months, making educational costs more manageable without taking on additional debt.
• Private student loans: After exhausting federal financial aid options, some students and families may decide to use private student loans to bridge remaining funding gaps. Some lenders offer specialized financing, such as parent student loans, law school loans, and health professions loans.
The Takeaway
The elimination of Grad PLUS loans for new borrowers and the new borrowing limits on Parent PLUS loans represent some of the most significant changes to federal student lending in years. While current borrowers may qualify for transition rules, future graduate students and families will need to plan carefully under the new borrowing limits.
Before enrolling in a college or graduate program, it’s important to review the total cost of attendance, understand how much federal aid you’re eligible to receive, and estimate any potential funding gap. Exploring alternatives — such as scholarships, grants, employer education benefits, tuition payment plans, and private student loans — can help you avoid last-minute financing decisions and find a solution that best supports your long-term financial goals.
If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.
FAQ
What changes are coming to Grad PLUS loans?
As of July 1, 2026, Grad PLUS loans are no longer available to new borrowers. Graduate and professional students can still borrow Federal Direct Unsubsidized Loans, but those loans have annual and lifetime borrowing limits. As a result, students attending higher-cost graduate programs may need to combine federal loans with scholarships, savings, payment plans, or private student loans to cover remaining education expenses.
What happens if I already have a Grad PLUS loan before July 1, 2026?
If you borrowed a Grad PLUS loan before July 1, 2026, your existing loans remain valid. Eligible borrowers can continue borrowing under the previous rules for up to three years or until they complete their current academic program, whichever comes first. However, if you withdraw from your program or enroll in a different graduate program, you generally become subject to the new federal borrowing rules.
What are the new federal borrowing limits for graduate students after July 2026?
Graduate students can continue borrowing up to $20,500 annually in Federal Direct Unsubsidized Loans, but the aggregate borrowing limit is now $100,000. Students in qualifying professional degree programs, such as law or medicine, may borrow up to $50,000 annually, with a $200,000 aggregate limit. The One Big Beautiful Bill Act (OBBBA) also established a $257,500 lifetime cap on federal student loans across undergraduate and graduate borrowing.
What changes are coming to Parent PLUS loans?
As of July 1, 2026, Parent PLUS loans have annual and lifetime borrowing limits. Parents can borrow up to $20,000 per student each year, with a maximum aggregate limit of $65,000 per student. Parents who borrowed Parent PLUS loans before July 1, 2026, may continue borrowing under the previous rules for a limited transition period if they remain eligible.
What options are available if federal loans don’t cover the full cost of attendance?
If your federal financial aid doesn’t cover all education costs, you may be able to bridge the gap with scholarships, grants, fellowships, assistantships, work-study, employer tuition assistance, or school payment plans. After maximizing available federal aid, some students also turn to private student loans. Comparing lenders, interest rates, repayment terms, and borrower benefits can help you choose the financing option that best fits your needs.
SoFi Private Student Loans
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