Thanks to President Trump’s Working Families Tax Cuts Act (the Act), new loan limits taking effect this summer will curb excessive borrowing and force institutions to evaluate their costs. These reasonable caps will help prevent borrowers from taking on debt they may struggle to repay while putting downward pressure on institutions to lower costs, making higher education more affordable for America’s students.
How does the Act impact federal student loans?
The Act affects both the Grad PLUS and the Parent PLUS loan programs and introduces reasonable loan caps on graduate-level federal student borrowing. Undergraduate student limits remain unchanged.
The Grad PLUS loan program, established in 2006, allows graduate students to borrow up to the full cost of attendance with no aggregate or lifetime limit. When introduced, it effectively removed federal borrowing caps for graduate students. Since then, both tuition and loan debt for graduate students has skyrocketed. Although graduate students make up a relatively small share of total borrowers, they account for a disproportionate share of the loan portfolio. For example, in 2024-25, graduate students represented 16.8% of borrowers but received 46.6% of total loan disbursements that year.
The Act eliminates the Grad PLUS program, and instead responsibly reinstates borrowing limits for graduate programs by introducing new annual and aggregate limits on federal student loans for graduate and professional students beginning on July 1, 2026. Sensible limits will help curb overborrowing and put pressure on institutions to reduce costs, including unnecessary administrative spending.