How To Pay for Grad School as Federal Student Loan Rules Change

Paying for grad school has always been expensive, but costs may become even harder to cover due to upcoming changes in federal student loan policy. Let’s look at what the elimination of grad PLUS loans means for new borrowers and how to pay for grad school in 2026.

Current private student loan rates

Changes to federal graduate student loans in 2026

Paying for graduate school is changing significantly as grad PLUS loans are eliminated for new borrowers and new federal loan limits take effect. 

The new rules also create separate borrowing limits for graduate and professional students, making your degree program a key factor in how much federal aid you can access.

These new limits are a big shift from the previous model, which allowed graduate students to borrow up to the full cost of attendance through the grad PLUS program.

According to the new rules, a professional student is someone enrolled in one of the following programs:

• Law
• Medicine
• Dentistry
• Pharmacy
• Veterinary medicine
• Chiropractic
• Optometry
• Osteopathic medicine
• Podiatry
• Theology 
• Clinical psychology 

This means students pursuing degrees in accounting, advanced nursing, physical therapy, physician assistant, and other programs aren’t considered professional students and are subject to lower federal loan limits. 

What does graduate school cost?

On average, the cost of tuition and fees can range from around $13,000 per year for more affordable programs like a Master of Education to more than $53,000 per year for medical school. 

You may be able to reduce costs by attending a public in-state university, which is typically more affordable than a private or out-of-state school. However, some private programs offer fellowships and tuition waivers, which can help bring the costs down. So as you’re comparing schools, it’s important to look at the total cost of the program, not just published tuition rates.

The program length also plays a large role in the total costs. A two-year MBA and a five-year PhD program may have similar annual price tags, but the total investment looks very different. And professional degrees like law and medicine run three to four years, which usually translates to at least six figures in debt by graduation.

Average cost by degree

Here’s an overview of the average costs by degree type:

Additional costs

Tuition and fees are only a part of your total graduate school expenses, and most students also need to budget for things like housing, food, books, and transportation. Here’s a breakdown of the additional costs grad students can expect to pay:

• Living expenses: Between $10,000 to $20,000 per year, depending on whether you’re living on or off-campus and the state you’re living in.
• Books and supplies: Most students spend between $500 to $1,000 per year on textbooks and other resources like software or lab fees.
• Health insurance: Some programs require graduate students to carry health insurance, which costs between $1,500 to $3,000 per year.
• Transportation: You can expect to pay between $500 to $2,000 per year on transportation costs.

What are the best ways to pay for grad school?

The best ways to pay for grad school involve funding you don’t have to repay, such as grants, scholarships, fellowships, and assistantships. Options like university stipends, research or teaching assistant roles, and federal work-study can help reduce how much you need to borrow. If you still have a gap, consider federal student loans before using private student loans.

Grad school grants and scholarships

Grad school grants can come from your school, the federal government, or private organizations. For example, the Teacher Education Assistance for College and Higher Education (TEACH) Grant offers up to $4,000 per year to students planning to teach in a high-need field at an elementary or secondary school.

“People don't often associate scholarships with grad school, but they definitely exist,” explains Jack Wang, a wealth adviser with Innovative Advisory Group who specializes in college financial aid. 

You can find some commonly overlooked scholarships from companies, foundations, and professional organizations, Wang says. 

Assistantships and fellowships for grad students

Fellowships and assistantships are special types of financial aid for grad school. Fellowships typically pay a stipend to support a student's research, while assistantships require you to work for the university in exchange for tuition support or a living stipend.

Wang says these types of funding are often underutilized by grad students. “I don't often hear from students even thinking about applying for fellowships since they're perceived as being for only the 'best' students,” he says. “Though they require work, research stipends and teaching assistant positions are also ways to help pay for grad school and can help further the student's long-term career goals.”

Graduate work-study

Graduate students are eligible for the federal work-study program, which provides part-time jobs for students with demonstrated financial need. Work-study earnings can help cover day-to-day expenses without adding to your loan balance.

Federal graduate student loans

Once you’ve maxed out all of your free aid options, federal student loans are typically the next best choice. Graduate students can borrow unsubsidized Direct Loans up to $20,500 per year. However, graduate students aren’t eligible for subsidized loans, so the interest continues to accrue while you're still in school.

Private student loans for graduate school

When federal aid falls short, private graduate school loans can fill the gap.

“Private grad loans are still an option and may be used more frequently now with the lower limits on federal loans,” Wang says.

Private loans don't come with the same flexible repayment options and forgiveness programs that federal loans offer, so it's generally best to exhaust federal options first.

What's the difference between federal and private grad school loans?

Graduate students have two primary borrowing options: federal loans issued by the U.S. Department of Education and private loans from banks and credit unions. Most federal loans don't require a credit check and come with important protections, including income-driven repayment plans, deferment and forbearance options, and loan forgiveness programs. 

Private loans can fill gaps when federal aid isn't enough, but they offer fewer borrower protections and stricter eligibility requirements. Lenders usually have specific credit score requirements, and the interest rate you receive depends on your or your cosigner’s credit score and financial history. 

Can you get financial aid for graduate school?

Graduate students are eligible for financial aid, and the process isn't all that different from applying for undergraduate aid. The first step is completing the Free Application for Federal Student Aid (FAFSA), which determines your eligibility for federal grants, loans, and work-study programs. 

However, graduate students aren’t eligible for the Pell Grant, which is the most widely used federal grant for undergraduate students. However, other federal grants are available depending on your field of study. Beyond federal aid, many schools offer their own institutional grants, fellowships, and assistantships that don't require repayment.