What Graduate Students Need To Know With Grad PLUS Loans Ending in 2026

For years, graduate and professional students have used the Federal Graduate PLUS loan program to borrow up to their school’s full cost of attendance, without aggregate limits. That era is coming to an end.

Starting with the 2026–27 academic year, unlimited borrowing is being replaced by strict federal caps. If you aren't already a federal student loan borrower by July 1, 2026, your loan options will look very different. 

Here's what you need to know as a borrower.

Current private student loan rates

What are grad PLUS loans?

Grad PLUS loans are issued by the U.S. Department of Education. They are available to:

• Students enrolled at least half-time in an eligible program leading to a graduate or professional degree or certificate
• Students who don't have an adverse credit history (or who can meet additional requirements)
• Students who meet the general eligibility requirements for federal student aid, including being a U.S. citizen or eligible non-citizen.

Through these loans, students can borrow as much as the school's cost of attendance, minus other financial aid, and pay a fixed interest rate plus an upfront origination fee. For Direct PLUS Loans disbursed July 1, 2025, to July 1, 2026, the interest rate is 8.94%, and the upfront fee is 4.228%. 

Because these loans establish no upper limit other than the cost the school charges, there's been some concern that students may borrow too much, and that the unlimited loan amounts have contributed to rising tuition costs in graduate programs.

How are grad PLUS loans changing in July 2026?

The grad PLUS loan program was created in 2006 and is one of two kinds of loans the Department of Education offers to graduate students. 

However, that will no longer be the case for new borrowers beginning with the 2026-27 school year, as the grad PLUS loan program is being eliminated under new federal financial aid rules.

Elimination of new grad PLUS loans

Starting July 1, 2026, grad PLUS loans will not be available to new borrowers. The program’s elimination is one of a wide range of changes included in a sweeping tax and spending bill passed in 2025 known as the “One, Big, Beautiful, Bill Act.” The Department of Education, in implementing the new financial aid rules, said the grad PLUS program has “fueled unsustainable student loan borrowing.” 

The decision to end the program will affect existing borrowers differently from new borrowers, because there are legacy provisions in place. These rules allow people who have already started using grad PLUS loans to continue borrowing for their current program for a limited period of time. 

Those who haven’t yet taken out a grad PLUS loan will only be able to access Federal Direct Unsubsidized Loans for graduate students after the July deadline, and will also be subject to new limits on those loans.

Here's how different kinds of borrowers are affected.

Who is affected by grad PLUS loan changes?

The new rules for grad PLUS loans will affect grad students differently depending on their borrowing status. 

Students who have already taken out a grad PLUS loan

Current borrowers will experience the least impact from the end of the grad PLUS loan program, although they could still be affected if they wanted to switch programs or take a semester off. 

“Current borrowers are grandfathered in if they are enrolled as of June 30, 2026, and have borrowed at least one federal loan,” notes Mark Kantrowitz, president at PrivateStudentLoans.guru. 

“They can then continue borrowing grad PLUS loans with an annual limit up to the cost of attendance minus other aid and no aggregate limit,” Kantrowitz explains. “They can continue borrowing until the normal timeframe for degree completion or three years, whichever comes first.”

However, students who want to take a leave of absence or who want to switch programs could lose their legacy status.

“There is an issue for current borrowers if their current program has a built-in break,” says Jack Wang, a wealth adviser and college planning strategist. “Some medical programs, for example, have a built-in semester off. The question remains whether that break will mean the student 'unenrolls' and then lose the grandfathered limits. Nobody knows yet.”

Grad school students applying for federal student loans after July 1, 2026

Students seeking federal student aid after the July 1, 2026, deadline are going to be the most affected by these changes. Students will still have some options to borrow for grad school, but will be subject to strict new caps. 

“New borrowers will be subject to the new rules, which involve a repeal of the grad PLUS loan and new annual and aggregate graduate student limits on the Federal Direct Stafford Loan,” warns Kantrowitz.

Federal student loan options after the grad PLUS program ends

New borrowers will still be able to use Direct Unsubsidized Loans to help pay for graduate school.  However, these loans have new annual and lifetime limits, which vary by program. Here are the new limits effective July 1, 2026:

• Graduate: $20,500 annual; $100,000 aggregate
• Professional: $50,000 annual; $200,000 aggregate
• Lifetime limit for all federal student loans: $257,500 (excluding parent PLUS loans)

While the $20,500 limit is pre-existing, both the $100,000 cap and the $257,000 lifetime limit are new. 

The National Association of Independent Colleges and Universities indicates that a professional degree is “A degree that signifies both completion of the academic requirements for beginning practice in a given profession and a level of professional skill beyond that normally required for a bachelor's degree. Professional licensure is also generally required.”

The programs that are listed specifically in the regulation include, but are not limited to the following: 

• Pharmacy 
• Dentistry 
• Veterinary Medicine 
• Chiropractic Medicine;
• Law 
• Medicine 
• Optometry 
• Osteopathic Medicine 
• Podiatry 
• Theology

The borrowing limits are the key difference between grad PLUS loans vs. unsubsidized Loans, although interest rates and origination fees also differ.

Alternatives to federal student loans for graduate school

With these changes, new graduate students will no longer be able to rely on the Department of Education to fully fund their programs anymore. It will be important to consider alternatives.

Private graduate student loans

Student loans from private lenders are the most likely place graduate students will turn if federal loans are no longer enough. 

“Students and families will likely have to turn to private student loans, or other borrowing to pay for grad or professional school,” explains Wang. “One thing students and their families will have to really consider is their overall credit profile, including credit score and debt-to-income. Parents are going to have to play a bigger role in co-signing for private loans, which is a significant difference from what I typically hear now.”

There are many private graduate student loan options available, including loans with fixed and variable rates as well as with a choice of different repayment timelines. Private student loans are also sometimes more affordable than grad PLUS loans because there are lenders that don't charge origination fees. Well-qualified borrowers may also qualify for competitive rates. However, there are no borrower protections like loan forgiveness or income-driven payment with private loans.

Scholarships, fellowships, employer assistance

Students who want to pursue grad degrees but who aren't comfortable borrowing a lot from private lenders will also need to explore other funding sources, such as:

• Scholarships: These are offered by schools, states, and private organizations. Your school's financial aid office can help you explore opportunities. 
• Fellowships: Graduate fellows often receive free tuition and even a stipend for living expenses, so explore these programs in your field of study.
• Employers: Companies sometimes provide tuition assistance if you complete a graduate degree related to your job. You may need to make a work commitment to be eligible.