Under Grad PLUS, students have been able to borrow up to the full cost of attendance. That program is ending this summer.
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Some borrowers with an existing Grad PLUS loan may, starting July 1, no longer be able to take out more than $257,500 in federal loans, the Education Department said this week.
It’s one of multiple changes the department has made to recent policy proposals months before they take effect. Student aid experts say the change—which stemmed from an updated interpretation of the One Big Beautiful Bill Act—is making it difficult to keep college aid officers up to speed so they can properly advise students and provide accurate financial aid offer letters.
They also add that it could be crippling for some current borrowers who started their post-baccalaureate degree depending on federal loans as a means to pay their tuition and fees. The scope of the impact is unclear, but those who are enrolled by now and complete their studies in the next three years won’t be impacted.
Grad PLUS loans, which was historically available to all students pursuing a master’s degree or higher, allow students to borrow up to the full cost of attendance. But Congress terminated the program last summer when it passed OBBBA and in its place established new limits on federal lending. That includes capping how much money any borrower can take out in a lifetime at $257,500.
For many postbaccalaureate students—especially those pursuing the most costly fields of study, like medicine, dentistry and law—that amount likely will not be nearly enough, experts say.
“It sounds like a lot, but not for a student who’s in a long and expensive program,” said Jill Desjean, director of policy analysis at the National Association of Student Financial Aid Administrators, which first flagged the change in policy. “You can burn through that amount of money in a couple of years.”
(And that’s if the student had not taken out any federal loans for their bachelor’s degree first. Students who took out the maximum undergraduate loan may only have about $200,000 left to work with.)
In OBBBA, Congress stated that $257,500 was “the maximum aggregate amount of loan” that could be “made, insured, or guaranteed” to any student “other than a Federal Direct PLUS loan, or loan under section 428B, made to the student as a parent borrower on behalf of a dependent student.”
At first, the Education Department, which was tasked with interpreting the law and ironing out its details, said this meant that existing Grad PLUS borrowers—regardless of when they finished their degree—would be exempt from the lifetime loan limit. That was formalized in the department’s proposed regulations, which have already undergone public comment and have since been reinforced in multiple guidance materials provided by the Office of Federal Student Aid.
But now, the Education Department appears to have reversed its interpretation of the law and is saying that certain Grad PLUS borrowers are not exempt.
“The Department is in the final stages of rulemaking which will address these comments and other issues raised by members of the public on the proposed rule,” Ellen Keast, the department’s press secretary for higher education, said in a statement to Inside Higher Ed.
The change was first noted verbally as part of an OBBBA webinar Friday, sources say. It was then written on the webinar landing page, where department officials directly say, “Graduate PLUS loans will be included in the new $257,500 lifetime aggregate borrowing limit.”
The department has since provided further clarification, stating that borrowers who received a Grad PLUS loan prior to July 1 will be able to continue borrowing under their pre-OBBBA loan terms. This will remain true for the remaining time until they complete their course of study or three years—whichever is earlier—so long as they remain continuously enrolled. All these changes will likely be reflected in a finalized version of the rule, which is expected to drop at least 30 days before it takes effect on July 1.
That means that the lifetime limit will only be a concern for students with a Grad PLUS loan who:
- Decide to take a break before completing their degree
- Are studying part-time or are enrolled in a dual-degree program and need more than three years to complete their studies
- Had utilized the Grad PLUS program in the past, took out more than $257,500 during that course of study and are now looking to take out federal loans again while pursuing a third or fourth degree
Still, financial aid experts say, the change could be catastrophic for the students who are affected—many of whom are likely enrolled in the most expensive fields of study.
If those students hit the lifetime loan limit prior to completing their degree, experts explained, they would have to take out private loans or find other means of financing. And for students from a low-income background or with a low credit score and no co-signer to vouch for them, private loans may not be an option.
That means students who enrolled under the impression that they would be able to pay their tuition through low-interest federal loans could be forced to stop out before completing their degree, leaving them with high amounts of debt and no higher credential to enable them to pay it off.
“If they got the degree, they could afford to pay the debt back. If they don’t get that degree, that debt is going to be completely unsustainable,” Desjean said. “That’s a really frightening prospect to me.”
She also noted that there were no questions or concerns about the department’s view on lifetime loan limits raised during negotiations over the regulations last fall. But the department’s legal team also didn’t draw attention to the error. In her view, “The department has been mistaken all along,” but it only recently caught the error.
“The statutory text is pretty difficult to read. So I think a lot of people were relying on the department’s read of it,” Desjean explained.
Moving forward, NASFAA and others are urging the department to be more transparent in its guidance, particularly when it comes to the OBBBA policies. The turnaround between when the bill became law and when it will take effect is short, so clarity is important, they say.
“When significant policy changes are rolled out without clear, formal, and widely distributed guidance, there are severe consequences that directly affect students who need definitive answers now in order to make plans to pay for college,” NASFAA president Melanie Storey said in a statement.
