New Federal Loan Caps for Graduate Students Take Effect

New federal borrowing limits for graduate and professional students took effect July 1, 2026, under the 2025 budget law known as the One Big Beautiful Bill Act. The changes cap annual and lifetime borrowing and end the Grad PLUS loan program for most new borrowers.

Graduate students can now borrow up to $20,500 a year, with a $100,000 aggregate cap. Professional students, in fields such as medicine and law, can borrow up to $50,000 a year, with a $200,000 aggregate cap. A new lifetime limit of $257,500 applies across all federal direct student loans, excluding Parent PLUS. The law also caps Parent PLUS borrowing at $20,000 a year and $65,000 total per student.

The Grad PLUS program, which let graduate and professional students borrow up to the full cost of attendance, is eliminated. Students who were continuously enrolled in the same program as of June 30, 2026, may keep borrowing under a legacy exception for up to three years.

For Institutional Research and Effectiveness (IR/IE) offices, the caps raise questions the data will need to answer: whether graduate and professional enrollment shifts, whether students turn to private loans, and how affordability changes by program. Higher education groups, including the Association of American Universities, have urged a delay, warning of effects on fields such as medicine.

AIR will continue to track how the changes affect the data institutions report and use.