U.S. Graduate Student Loan Overhaul Limits PLUS Loans and Sets New Borrowing Caps

Effective July 1, 2026 the United States will end most new Grad PLUS loans for graduate and professional students, while capping federal graduate loans at $20,500 per year (up to $100,000 total) and professional loans at $50,000 per year (up to $200,000 total). The changes shift graduate education toward “affordability by design,” prompting schools to rethink program costs and financing.

Additional reforms include a 0.75‑percentage‑point interest‑rate cut for borrowers who enroll in automatic payments, and the removal of income‑driven repayment options for new Parent PLUS loans, which will now be limited to the standard tiered plan. As Betsy Mayotte of the Institute of Student Loan Advisors warned, “I fully expect default rates to shoot up over the next 10 years for Parent PLUS borrowers unless Congress goes back and fixes that.” These measures affect millions of current and prospective borrowers across the United States.