U.S. to Cap Graduate Federal Loans at $20,500 Yearly Starting July 1 Despite Partial Court Block

The U.S. Education Department will begin capping federal loans for graduate students at $20,500 per year and $100,000 overall on July 1, NPR reported. The department confirmed the limits will take effect despite a federal court order that temporarily blocked one element of the plan.

Republicans enacted the caps through last year’s One Big Beautiful Bill Act, which also ended the Grad PLUS program that had allowed unlimited borrowing for two decades. U.S. Secretary of Education Linda McMahon told the House education committee in May that college costs are exorbitant and that the limits are needed to bring prices down.

Current limits on undergraduate loans remain unchanged. Graduate students have accounted for nearly half of all federal student borrowing in recent years even though they represent a smaller share of total enrollment, according to Robert Kelchen of the University of Tennessee. Research on whether the Bennett Hypothesis applies to graduate programs has produced mixed results.

A team led by Jeff Denning found that Texas graduate schools raised prices by $0.64 for each additional dollar of Grad PLUS loans after 2006. Kelchen’s separate study of business, medical, and law schools found no direct link between aid and tuition levels. Several graduate programs have already reduced prices or introduced new scholarships ahead of the July 1 change.

The Education Department supplied NPR with a list that includes Johns Hopkins University Carey Business School, Lewis & Clark Graduate School of Education and Counseling, Neumann University, Purdue University’s online Master of Science in Global Supply Chain Management, University of California Irvine’s MBA program, and Santa Clara University School of Law.