The Education Department on Thursday finalized the student loan overhaul introduced in President Donald Trump’s “Big and Beautiful Act,” also known as the Working Families Tax Cuts Act, which was signed into law in July.
The final regulations include new borrowing limits on federal student loans for graduate and professional degrees beginning July 1, 2026.
Students in graduate degree programs can borrow up to $20,500 per year, up to a total of $100,000, and students in professional programs, such as medicine or law, can borrow up to $50,000 per year and up to $200,000 over the course of their studies. Previously, the annual limit for loans for graduate and professional programs was $20,500 and the lifetime limit was $138,500.
The regulation also eliminates the Graduate Student PLUS loan program, which previously allowed students to borrow up to the full cost of attendance, regardless of degree program.
“This final rule will help ensure students can pursue higher education without taking on excessive loan debt, provide repayment options that better serve borrowers, and force institutions to reduce costs,” said Education Undersecretary Nicholas Kent in a press release.
Despite pushback from professional organizations, academic institutions, and other stakeholders, the administration continued to narrow the definition of professional degrees to 11 doctoral programs.
Pharmacy (Pharm. D.) Doctor of Dentistry (DDS or DMS) Veterinary Medicine (DVM) Chiropractic (DC or DCM) Law (LLB or JD) Medicine (MD) Optometry (OD) Osteopathic Medicine (DO) Podiatry (DPM, DP, or Pod.D.) Theology (M.Div. or MHL) Clinical Psychology (Psy.D. or Ph.D.)
The final rule has been completed through a negotiated rulemaking process since the bill was passed in July. The process included a public comment period during which many stakeholders expressed concerns about the definition of a professional degree, which excludes programs such as social work, physical therapy, and nursing.
Clinical psychology was not included in the original proposed rule, but was added during the negotiated rulemaking process.
What the new loan limits mean for borrowers
Students currently enrolled in graduate and professional programs who take out loans, including grad PLUS loans, to pay for their education will have the new loan limit waived for up to three years.
The new rules also establish a total lifetime loan limit of $257,500, which includes undergraduate student loans and some graduate student PLUS loans. Borrowers who remain eligible for Graduate Student PLUS loans by remaining continuously enrolled in the program will not be subject to new aggregate limits for up to the three-year forgiveness period or the expected period of eligibility, whichever is shorter.
Students borrowing for the first time after July 1 should be aware of borrowing limits when deciding which degree to pursue and where to study. Robert Farrington, a personal finance expert and founder of The College Investor, said graduate students still have access to financial aid and scholarships, but often not as much as undergraduates.
She said many graduate students rely on loans to fund their education, and the loan limits could make it difficult for students in some programs to cover costs with federal loans alone.
Despite the changes, federal loans remain “the best bet,” Farrington said. Under the new rules, income-driven repayment plans will no longer be available to new federal borrowers, but they will have access to new income-driven repayment plans as well as opportunities for forgiveness through Public Service Loan Forgiveness.
If you go beyond the federal loan limit and take out a private loan, “private loans don’t have forgiveness options like (PSLF), so it’s inherently more expensive,” Farrington said.
Unlike federal student loans, private student loans have credit history and income requirements that can make approval difficult for some prospective borrowers. Additionally, borrowers may be subject to variable interest rates on private loans compared to the fixed interest rates associated with federal student loans.
Do you want to get ahead at work? Next, you need to learn how to make effective small talk. In CNBC’s new online course, “How to Talk to People at Work,” expert instructors share practical strategies for using everyday conversations to increase visibility, build meaningful relationships, and accelerate career growth. Sign up now! Use coupon code EARLYBIRD for 20% off. Offer valid from April 20, 2026 to May 4, 2026. Terms and conditions apply.
