The Department of Education on Thursday finalized the student loan overhaul introduced in President Donald Trump’s “big beautiful bill,” also known as the Working Families Tax Cuts Act, which was signed into law in July.
The final regulations include new borrowing limits on federal student loans for graduate and professional degrees beginning with loans taken out July 1, 2026.
Students will be able to borrow up to $20,500 a year and up to $100,000 in total for graduate degree programs, while students in professional programs, such as medicine and law, can borrow up to $50,000 a year and $200,000 over the course of their studies. Previously, loans for graduate and professional programs had an annual limit of $20,500 and a lifetime limit of $138,500.
The regulations also eliminate the graduate PLUS loan program, which previously allowed students to borrow up to their entire cost of attendance, regardless of degree program.
“This final rule will help ensure students can access higher education without racking up excessive loan debt, offer repayment options that better serve borrowers, and force institutions to reduce costs,” Under Secretary of Education Nicholas Kent said in a press release.
Despite pushback from professional organizations, academic institutions and other stakeholders, the administration kept the definition of professional degrees narrowed to just 11 doctorate programs:
- Pharmacy (Pharm. D.)
- Dentistry doctorate (D.D.S. or D.M.S.)
- Veterinary medicine (D.V.M.)
- Chiropractic (D.C. or D.C.M.)
- Law (L.L.B. or J.D.)
- Medicine (M.D.)
- 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.)
Since the legislation passed in July, the final rule went through the negotiated rulemaking process to be finalized. The process included a public comment period, during which many stakeholders expressed concern over the professional degree definition excluding programs like social work, physical therapy and nursing.
Clinical psychology was not included in the original rule proposal, but was added during the negotiated rulemaking process.
What the new loan limits mean for borrowers
Students who are currently enrolled in graduate and professional programs who have taken out loans, including grad PLUS loans, to pay for their education are exempt from the new loan limits for up to three years.
The new rule also puts in place an aggregate lifetime loan limit of $257,500, which includes undergraduate loans and some grad PLUS loans.
Students borrowing for the first time after July 1 will want to be aware of the loan limits when deciding what degree to pursue and where to study. Financial aid and scholarships are still available for graduate students, but often to a lesser degree than undergraduates, says Robert Farrington, a personal finance expert and founder of The College Investor.
Many graduate students rely on loans to fund their education, he says, so the loan limits may make it difficult for students in some programs to cover their expenses with only federal loans.
Despite the changes, federal loans are still the “best way to go,” Farrington says. Although the income-contingent repayment plan will not be available for new federal borrowers under the new rule, they will have access to a new income-driven repayment plan as well as forgiveness opportunities through Public Service Loan Forgiveness.
If you exceed the federal loan limits and take out private loans, “private loans don’t have forgiveness options like [PSLF], so it inherently becomes more expensive,” says Farrington.
Unlike federal student loans, private student loans may have credit history or income requirements that could make it difficult for some would-be borrowers to be approved. Additionally, borrowers could be subject to variable interest rates on private loans versus the fixed rates that come with federal student loans.
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