Several new federal student loan changes went into effect on July 1, 2026. In addition to higher loan rates, new borrowing limits and the modification or phasing out of some repayment plans are also at play. Under the new rules, Grad PLUS loans are no longer available to most new borrowers, though there are some exceptions for existing students. The new structure could leave graduate and professional students looking for other ways to cover their education costs.
Federal Direct Unsubsidized Loans remain available, but students whose education costs exceed the new limits may need to combine federal loans with scholarships, savings, employer assistance, private student loans or other funding.
What changed for graduate student loans in 2026?
The end of Grad PLUS is only one part of the overhaul. Additional changes affect how much graduate and professional students can borrow, which repayment plans are available and, in some cases, how individual programs are treated under the new rules:
- Most new graduate and professional students can no longer use Grad PLUS loans to borrow up to their school’s cost of attendance minus other financial assistance.
- Graduate students can generally borrow up to $20,500 annually in Direct Unsubsidized Loans, with a $100,000 aggregate limit.
- Professional program students can generally borrow up to $50,000 annually, with a $200,000 aggregate limit.
- MBA programs aren’t classified as professional degree programs under the new rules, meaning MBA students are subject to the lower graduate borrowing limits.
- A new $257,500 lifetime federal student loan limit applies to affected borrowers, excluding Parent PLUS loans.
- New borrowers can choose between the Repayment Assistance Plan (RAP) and the new Tiered Standard Plan, while Saving on a Valuable Education (SAVE), Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) are being phased out.
- Many existing Grad PLUS borrowers can continue borrowing under the previous rules for up to three academic years or until they complete their program, provided they remain continuously enrolled in the same program.
- Schools can establish lower loan limits for specific programs if they apply those limits consistently to students in those programs.
Which graduate students could be affected the most?
Students whose total cost of attendance exceeds their available federal borrowing are likely to feel the changes most directly. That could include students attending expensive graduate or professional programs, those living in high-cost areas and students who previously would have relied on Grad PLUS loans to close a funding gap.
That gap could become increasingly important as college costs continue to rise. It may be particularly significant for intensive professional programs that leave students little opportunity to earn substantial income while attending school.
Jenni Majumdar, Assistant Professor, Hunter-Bellevue School of Nursing at Hunter College (City University of New York) says, “We are already seeing students change how they plan to finance their education. In professional programs where working during school is often not feasible, students are looking earlier to private loans, scholarships, savings and employer support.”
Students entering these programs may need to develop a financing strategy earlier rather than waiting until enrollment to determine how they’ll cover the full cost.
What happens if federal loans don’t cover the full cost?
While the recent changes don’t necessarily prevent you from attending graduate school, you may need another way, beyond federal loans, to cover the difference between your available funding and expenses.
Options can include:
- Scholarships, grants and fellowships.
- Graduate assistantships or other school-based aid.
- Personal or family savings.
- Employer tuition assistance or education benefits.
- Income from working while attending school, when practical.
- Private student loans.
- Choosing a lower-cost program or reducing living expenses.
Working during graduate school isn’t realistic for every degree program. However, students who can attend part time or receive employer education benefits may be able to reduce the amount they need to borrow.
“Rather than attending full time, students may consider working while attending graduate or professional school and thereby enjoying the benefit of a salary and perhaps tuition assistance from their employer. With this approach, less money will need to be borrowed,” says Patricia Roberts, Chief Operating Officer at Gift of College, Inc.
Will more graduate students need private student loans?
Private student loans could become more important for students whose education costs exceed the new federal limits. Private graduate student loans can help cover remaining education costs, but unlike federal loans, they’re issued by private lenders, with approval, rates and terms determined by the lender.
Graduate students with limited income or credit history may need a creditworthy co-signer to qualify or receive competitive terms. Private loans also generally don’t provide the same federal repayment, forgiveness and borrower protections as federal loans. Considering private financing should include comparing interest rates and terms, as well as borrower protections.
Federal vs. private loans for graduate school
Federal limits may require students to finance some of their graduate studies using private loans.
| Feature | Federal graduate loans | Private student loans |
| Interest rate | Fixed for each loan | Varies by lender and borrower; fixed or variable rates may be available |
| Borrowing limits | New federal annual and aggregate limits apply | Vary by lender and cost of attendance |
| Credit requirements | Credit check not required | Generally credit-based |
| Co-signer | Not required | May be necessary or help borrowers qualify for better terms |
| Repayment options | RAP and Tiered Standard plans | Vary by lender |
| Deferment and forbearance | Federal protections available | Vary by lender |
| Federal forgiveness eligibility | Eligible loans may qualify for applicable programs | Not eligible for federal forgiveness |
| Funding availability | Subject to federal and potentially school limits | Subject to lender approval and limits |
What to consider before using private loans to fill the gap
While private student loans can be useful for filling a graduate-school funding gap, it’s essential to carefully compare lenders before committing.
Considerations:
- The interest rate you actually qualify for and whether it’s fixed or variable.
- Monthly payments and total interest for the duration of the loan.
- Whether payments are required while you’re attending school.
- Deferment and forbearance policies.
- Co-signer requirements and release provisions.
- Death or disability discharge policies.
Common mistakes to avoid under the new student loan rules
The financing strategy that worked for graduate students before July 2026 will no longer work for many. Here are some common mistakes to avoid while navigating the changes:
- Assuming you can borrow up to the full cost of attendance from federal sources.
- Waiting until enrollment to identify a funding gap.
- Not thoroughly comparing private loans and lenders.
- Incorrectly estimating the total cost of education and living while attending.
- Overlooking scholarships, employer assistance and other funding sources.
- Borrowing more than you need simply because the money is available.
As Leslie Tayne, Founder and Head Attorney at Tayne Law Group, explains, “The biggest mistake that I see students or families make when shopping around for a student loan is borrowing all of what they are approved for, rather than just what they need.”
Bottom line
While the new student loan rules don’t eliminate federal financing for graduate school, they do introduce less borrowing flexibility for some students. Understanding the rules and calculating your expenses, funding gap and available federal loan amounts is essential. If there’s a funding gap, compare scholarships, employer assistance, savings and private financing to determine the best way to cover it.
Graduate student loan changes FAQs
What changed for graduate student loans in 2026?
The most significant changes to federal student loans that began on July 1, 2026, include the elimination of Grad PLUS loans for most graduate and professional students, and the implementation of new annual and aggregate federal borrowing limits.
Are Grad PLUS loans still available in 2026?
Grad PLUS loans are not available for new graduate or professional borrowers after July 1, 2026. A temporary exception of up to three years or until their current program is completed may apply to those who previously borrowed for their current program and remain enrolled.
How much can graduate students borrow in federal student loans?
Graduate students subject to the new limits can generally borrow up to $20,500 annually and $100,000 in aggregate. Professional students can generally borrow up to $50,000 annually, with a $200,000 aggregate limit. A new $257,500 lifetime federal student loan limit also applies.
What happens if federal student loans don’t cover graduate school?
If federal student loans don’t cover the cost of graduate school, you’ll need to cover the remaining amount through other resources, which could include scholarships, grants, savings, employer assistance, income from working, private student loans or choosing a less expensive program.
Can graduate students use private student loans?
Graduate students can use private student loans to cover qualifying education expenses. However, they will be subject to the lender’s underwriting and borrowing requirements.