This year, the federal government will curb access to billions of dollars in student loans, reconfigure how borrowers repay their debt and provide new grant money for short-term career training programs.
All of these changes are slated to take effect in July and are the result of the One Big Beautiful Bill signed into law in the summer. The financial aid provisions in the law, which extend tax cuts from President Donald Trump’s first term, will affect how families pay for higher education. Since November, the Education Department has been negotiating the terms of the policies with a panel of experts, as required by Congress. Terms for the new rules will be finalized early this year, with few anticipated changes.
While some higher education experts say the changes will deliver commonsense reforms, others worry they could discourage college enrollment and persistence. Either way, students entering college in fall 2026 will encounter a very different federal financial aid system.
In one of the largest revisions to federal student loan policy in decades, the Education Department will impose new caps on the amount of money graduate students and parents can borrow from the government.
The Grad Plus program, which lets students borrow up to the full cost of attendance to pay for graduate degrees, will sunset on July 1 for new borrowers. At the same time, people pursuing a master’s degree will have their borrowing capped at $20,500 a year and $100,000 over a lifetime. Those working toward a professional degree — for instance aspiring doctors or lawyers — will be capped at $50,000 a year and $200,000 in total from the federal government.
In all, students will now face a lifetime maximum borrowing limit of $257,500 for undergraduate and graduate school federal loans combined. If those amounts are not enough to cover costs, students will have to pay the rest themselves or turn to private lenders.
The distinction between graduate and professional degree programs has been a lightning rod for controversy. Nurses and others have railed against the Education Department’s proposal to exclude their fields from the higher loan limits. They worry the agency’s move to restrict the professional degree classification to 11 fields will discourage people from enrolling in other advanced degree programs.
The proposal must still be published for public comment before it can be finalized, which allows its detractors to fight for a broader classification.
Researchers say a substantial number of students pursuing master’s degrees will be affected by the new limits. An analysis by the Federal Reserve Bank of Philadelphia found that one-third of graduate students with federal loans have borrowed more than the new limits will allow. Research from the Postsecondary Education & Economics Research at American University found that students in professional programs are more likely to borrow in excess of the new limit.
Beth Akers, a senior fellow at the conservative American Enterprise Institute, said she suspects that many people will be caught off guard by the new constraints on graduate borrowing, and she says colleges are not doing enough to prepare.
Financial aid changes take effect in July
