AGB Policy Alert: Graduate Student Loan Limits

On November 7, 2025, the U.S. Department of Education (ED) concluded its negotiated rulemaking session to implement student loan provisions of the One Big Beautiful Bill Act (OBBBA), a sweeping legislative package enacted earlier this year. The Reimagining and Improving Student Education (RISE) Committee reached consensus on all 17 proposals advanced by ED, including new limits on federal borrowing for graduate students.

These forthcoming changes mark a significant shift in federal higher education financing, with potential consequences for institutional budgets, enrollment patterns, and access to advanced degrees.

What Board Members Need to Know

With consensus reached by the negotiated rulemaking members, including representatives of ED, we have a clearer picture of how ED’s regulations on these issues will affect the implementation of the OBBBA requirement that effectively ends the Grad PLUS loan program and introduces caps on federal borrowing for graduate students across most programs. While ED will determine implementation details through the issuance of a proposed rule for public comment and an eventual final rule in early 2026, the direction is clear: graduate education will soon operate under a fundamentally different financial model. Beginning in July 2026, this will include tiered borrowing limits implemented as part of the OBBBA, which caps annual loans at $100,000 for new graduate students and $200,000 for professional students.

Key elements of the agreement include:

• Definition of “Professional” Degree Program: A “professional” degree program gains access to the highest amount of federal loans, up to $200,000. To qualify, the degree must signify that students have the skills to begin practice in a particular profession, require a level of skill beyond that of a bachelor’s degree, be a doctoral-level degree (with the exception of a master’s in divinity), require at least six years of academic instruction (at least two of which are post-baccalaureate), involve a profession that requires licensure, and be included in the same four-digit Classification of Instructional Programs (CIP) code as one of 11 professions explicitly mentioned in the regulation.
• Elimination of Grad PLUS Loans: The regulations prescribe the OBBBA provisions that would end the long-standing program allowing graduate students to borrow up to the full cost of attendance, permitting federal loans of up to $100,000.
• Rapid Implementation Timeline: ED intends to publish proposed regulations in early 2026, with final rules anticipated later in 2026 to apply to the 2026–27 academic year.

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Key Implications for Governing Boards

The passage of the OBBBA, along with this insight into its implementing regulations, represents one of the most significant overhauls of federal graduate aid since the creation of the Direct Loan Program. Governing boards should consider the long-term implications for institutional strategy, academic offerings, and mission fulfillment, including:

• Graduate Program Viability: Institutions will need to assess the sustainability of high-cost graduate programs that rely heavily on federal loan availability.
• Enrollment and Access: Borrowing caps could deter enrollment among lower-income and first-generation graduate students, narrowing access to advanced degrees.
• Financial Planning: Reduced loan eligibility may impact tuition revenue, auxiliary operations, and financial aid budgets, particularly at tuition-dependent institutions.
• Equity and Workforce Goals: The changes risk undermining national efforts to diversify professional fields, including law, education, and health care, by limiting access for underrepresented populations.

Call to Action: Prepare and Advocate

As ED moves from consensus to formal rulemaking, institutions should take proactive steps to evaluate impacts and engage policymakers to help shape implementation:

• Engage Institutional Leadership and Boards—Presidents, chancellors, and governing boards should immediately assess potential impacts on institutional finance, program viability, and student demographics. Collaborative planning will be essential to sustain mission-critical graduate programs and maintain equitable access to advanced education.
• Communicate with Federal Policymakers—Reach out to your congressional delegation and ED contacts to share how these changes will affect your institution and students. Highlight programs at risk and the regional economic implications of reduced graduate-level access.
• Use Institutional Data—Inform advocacy and planning by using specific institutional data, including:
  • Percentage of students currently using Grad PLUS loans.
  • Average graduate borrowing and debt levels.
  • Anticipated enrollment changes by discipline.
  • Projected financial shortfalls or program consolidations.