Department of Education Finalizes Borrowing Caps for Graduate and Professional Federal Student Loans

The Department of Education finalized a student loan overhaul on Thursday, introducing new borrowing limits on federal student loans for graduate and professional degrees beginning with loans taken out on July 1, 2026. Students can borrow up to $20,500 a year and up to $100,000 in total for graduate degree programs.

For professional programs such as medicine and law, students can borrow up to $50,000 a year and $200,000 over the course of their studies.

Previously, loans for graduate and professional programs had an annual limit of $20,500 and a lifetime limit of $138,500. The regulations eliminate the graduate PLUS loan program, which previously allowed students to borrow up to their entire cost of attendance regardless of degree program.

The changes stem from the Working Families Tax Cuts Act, enacted in July 2024, which directed the Department of Education to revise federal loan programs.

The final rule went through the negotiated rulemaking process since the legislation passed in July, including a public comment period. The administration kept the definition of professional degrees narrowed to 11 doctorate programs: Pharmacy (Pharm.

U.S. C. D. ). Clinical psychology was not included in the original rule proposal but was added during the negotiated rulemaking process. The new rule puts in place an aggregate lifetime loan limit of $257,500, which includes undergraduate loans and some grad PLUS loans.

Students currently enrolled in graduate and professional programs who have taken out loans, including grad PLUS loans, are exempt from the new loan limits for up to three years. Borrowers who retain eligibility for grad PLUS loans by staying continuously enrolled in their program will not be subject to the new aggregate limit during their exemption period of up to three years or their expected time to credential, whichever is shorter.

The income-contingent repayment plan will not be available for new federal borrowers under the new rule.

New federal borrowers will have access to a new income-driven repayment plan as well as forgiveness opportunities through Public Service Loan Forgiveness. "' Private loans often require credit checks or income verification and may carry variable interest rates, differing from federal loans' fixed rates and broader eligibility.

Private student loans could be subject to variable interest rates, versus the fixed rates that come with federal student loans.

The Department of Education displayed a sign outside its federal student aid office on May 18, 2025, in Washington, DC.