Part 2—Loan Limits: What Students and Parents Need to Know About Borrowing for College

The new federal policy overhauls how much students and parents can borrow through federal student loans. It introduces clear caps on borrowing, eliminates certain loan types, and aims to make student debt more manageable and predictable. If students are planning to go to graduate or professional school—or parents planning to help your child pay for college—there is a major shift coming your way.

If you are planning to attend grad school after 2026—or you are a parent planning to help fund your child’s education—these changes matter.

Say Goodbye to Unlimited Grad Loans

Starting July 1, 2026, two major loan programs will be eliminated:

• Subsidized Loans for Graduate Students: These loans did not accrue interest while you were in school. They are going away.

• Grad PLUS Loans: These allowed grad students to borrow up to the full cost of attendance. Also gone.

Instead, graduate and professional students will be limited to fixed annual and lifetime borrowing caps.

New Federal Loan Caps

Here is what students can borrow under the new rules:

Student Type	Annual Limit	Lifetime Limit
Graduate (e.g., MA, MS)	$20,500	$100,000
Professional (e.g., law, med)	$50,000	$200,000

Note: If you have been both a grad and professional student, your total cap is still $200,000, adjusted based on what you have already borrowed.

Parent PLUS Loans Get Capped Too

Previously, parents could borrow up to the full cost of attendance per student. Under the new law, this will be capped:

Per Student	Annual Limit	Lifetime Limit
Parent PLUS Loans	$20,000	$65,000

Side-by-Side: Current vs. Future Loan Limits

Borrower Type	Current Limit	New Limit (2026 & After)
Graduate Students	Up to $20,500/year (Unsubsidized Stafford); PLUS loans up to full cost of school	$20,500/year; $100,000 lifetime cap (PLUS loans eliminated)
Professional Students	Up to $20,500/year (Unsubsidized Stafford); PLUS loans up to full cost of school	$50,000/year; $200,000 lifetime cap (PLUS loans eliminated)
Parent PLUS Loans	Up to full cost of attendance (no set federal cap)	$20,000/year per student; $65,000 lifetime cap per student
Undergraduate Students	$5,500–$12,500/year (depending on year and dependency status)	No change

What is the Total Cap for a Student?

If you include undergraduate, graduate/professional, and Parent PLUS borrowing (by their parents), the maximum combined federal borrowing could be:

• Undergraduate Loans: Up to $31,000 (dependent) or $57,500 (independent)

• Graduate Loans: Up to $100,000

• Professional Loans: Up to $200,000

• Parent PLUS Loans: Up to $65,000 (borrowed by parent on student’s behalf)

Note: These are separate caps and not all stackable by the same borrower. The student’s own cap is based on their level of study, while Parent PLUS is a separate cap for parents borrowing on their behalf.

Other Key Rules

• Part-time students will get prorated loan amounts (e.g., half-time = half the loan).

• Total lifetime federal borrowing cap for all students (excluding Parent PLUS loans): $257,500 across all levels of study.

• Colleges may set their own lower limits for specific programs if applied fairly to all students.

What About Current Students?

If you are already in school and have taken out loans before July 1, 2026:

• You can still borrow under the old rules for up to 3 more academic years or until you finish your current program—whichever comes first.

Why This Matters

This is one of the most sweeping changes to federal student loans in decades. It:

• Caps borrowing to prevent runaway student debt

• Eliminates interest-free loans for grad students

• Shifts more financial responsibility to students and families to budget ahead and seek alternate funding

What This Means in Practice

• Most med and law schools cost $70K–$100K+ per year (tuition + living expenses).

• With a $50K/year cap, students may exhaust federal loan eligibility before graduating.

• Students from low-income or working-class backgrounds may be hit hardest, as they are less likely to qualify for private loans without a co-signer or good credit.

Bottom Line

• Plan ahead if you are starting law or medical school in Fall 2026 or later—new federal loan caps mean you will need to budget carefully.

• Explore alternatives such as scholarships, state programs, employer benefits, or private loans to help cover gaps.

• Understand the trade-offs: private loans may fill the gap, but they typically have higher interest rates and fewer borrower protections.

• Act now: Starting July 2026, the era of nearly unlimited federal student loans for graduate students, professional students, and parents ends. Annual and lifetime limits will apply, and subsidized and PLUS loans for graduate and professional students will be gone.

• Review your strategy to make sure you are financially prepared for these changes—whether you are the student or the parent helping pay.

Up next: we will explore how the legislation reshapes Pell Grants—including a new grant for workforce training.

Concerned about how the new loan limits could impact your child’s college options? Reach out today—let us help you explore your options and create a plan that works for your family.