Graduate education has never been inexpensive. Anyone who has signed loan documents for a professional degree or a master’s program is familiar with that specific feeling—the mixture of ambition and subdued fear that comes with taking out a five-figure loan just to keep the lights on while studying. The federal government basically said, “Borrow what you need,” for twenty years. July 1st marked the end of that era.
The Graduate PLUS loan program is no longer available to new borrowers as a result of the One Big Beautiful Bill Act. It was replaced by a more stringent, tiered system where a student’s borrowing capacity is largely determined by their course of study. The majority of graduate students, including those in master’s programs, education, social work, and the arts, are now subject to a $20,500 annual federal loan cap and a $100,000 lifetime cap. Compared to a system that had no hard ceiling before, that is a considerable decrease.
The figures are different for so-called professional students: up to $50,000 annually and $200,000 in total. However, this is where the last few days before rollout became chaotic. The Education Department’s initial definition of “professional” was limited to 11 programs, such as theology, dentistry, and medicine. Notably, nursing was left off the list. Neither were speech-language pathologists or physician associates.
That definition was deemed too restrictive by a federal judge in Washington. The Education Department had limited the definition of “professional degree” beyond what Congress truly intended, according to Judge Beryl A. Howell. Days before the new regulations were scheduled to take effect, the decision was made last week. The department hurriedly released an updated list of more than 20 qualifying programs on Monday. The cut was made for registered nurses. This also applied to a number of other health-related fields that had been noticeably lacking.
For good reason, women were keeping a close eye on this decision. More than 70% of graduates in the programs that were excluded from the higher borrowing limits under the original list are women, according to research from EdTrust. There was more to the court’s intervention than just a legal technicality. It completely altered the calculation of whether completing their degree was financially feasible for many students in the middle of their enrollment.
Whether the Trump administration will appeal the decision or try to update the list is still up in the air. Kathleen Boyd, a certified financial planner, has been cautioning her clients not to make any assumptions just yet, neither that they are capped at the lower limit nor that the higher limit will last forever. It is a burden in and of itself to have that level of uncertainty on top of a financial decision that is already stressful.
Reducing tuition is the administration’s stated objective for all of this. Education Secretary In May, Linda McMahon told the House education committee that something has to change because college expenses are just too high. The reasoning is based on a well-known economic theory: if students are able to borrow less, they will look for less expensive programs, forcing price competition from pricey institutions. Since then-Secretary William Bennett made a similar argument in 1987, the idea has been circulating in policy circles for almost forty years.
It remains to be seen if it truly works. Many economists are still dubious that loan caps by themselves will compel universities to lower tuition, especially in professional programs where demand is high and options are scarce. In the past, graduate schools have not demonstrated much willingness to voluntarily lower costs, and it’s unclear what will change that calculus in the present.
There is no doubt that things have changed, and students who enroll this autumn will be entering a different financial environment than their predecessors. The limits will be acceptable to some. There will be a significant discrepancy between what they can borrow and the cost of their program for others. It will take years to tell the full story of how that gap is filled, whether it is through savings, private loans, or choosing not to enroll at all.
