Most of the colleges with the largest graduate programs in the country don’t have clear plans for how they’ll deal with new loan caps, set to kick in next July. And if they do, they aren’t taking publicly about it.
For years, students could borrow essentially unlimited funds to pay for graduate education, thanks to a program known as Grad PLUS that capped loans at the cost of attendance. Republicans in Congress and other critics have argued that colleges took advantage of this program and raised their prices, fueling the student debt crisis. Loans for grad students make up nearly half of the federal loan portfolio.
Along the way, colleges have begun to rely on graduate education to fund their university operations, higher ed experts say.
But now that two-decade-old system is ending. Congress eliminated Grad PLUS over the summer and will cap how much students can borrow for graduate education. Lawmakers also limited Parent PLUS loans, which were also previously uncapped and offered families a way to make up the gap and pay for college. Both changes came out of the One Big Beautiful Bill Act.
Beginning next summer, most graduate programs will have a federal loan cap of $100,000, with exceptions for a scaled-down number of professional programs with a limit set at $200,000. Those changes have created uncertainty for graduate schools and students who are navigating a changing landscape with fewer resources. Experts say graduate schools could face enrollment declines and some could shutter, thanks to the new limits.
Even before the loan caps, graduate education was facing a reckoning, particularly after the Trump administration clamped down on federal research funding. Colleges paused graduate admissions for doctoral programs, and sometimes rescinded offers. Meanwhile, colleges are starting to rethink their approaches to humanities doctoral programs, among other shifts in this space.
Planning for Change
To better understand how universities are planning ahead, Inside Higher Ed reached out to 20 of the largest graduate programs in the nation. Most did not respond. Those that did emphasized a mix of increased corporate engagement and expanded loan options, among other measures.
But for the most part, many appear to still be figuring it out.
“We’re spending a lot of time this year looking at diversifying the streams of funding for graduate students,” said Bonnie Ferri, vice provost for graduate and postdoctoral education at Georgia Institute of Technology.
Ferri noted that while Georgia Tech already has corporate partnerships that sponsor projects, which in turn help fund students, the university is doubling down on those efforts this year and “focusing on being more systematic” to spread those dollars across more graduate programs.
At a recent University of Florida Board of Trustees meeting, Vice President and Chief Enrollment Strategist, Mary Parker, said UF will “have to figure out how to fill the gap for our students” as loan options diminish. She noted UF is rolling out Scholarship Universe, a tool to help students find internal and external scholarships. Parker said UF is also “looking at the expansion of our institution loan program” and the university will also help students identify private loan options.
University of Illinois Urbana-Champaign spokesperson Patrick Wade told Inside Higher Ed by email that Illinois is still in the planning process and it is too early to share specific details. But Wade added that university officials “are directing units to begin developing contingency plans and to communicate proactively with current and prospective students, particularly in professionally oriented programs, where we expect recent changes to have the greatest impact.”
Several other institutions said it was too early to share details about how they’ll fill loan gaps.
Grad Enrollment Fallout
Some experts believe the changes to federal loans will leave students scrambling.
“I think when we get to July 1 next year, when these caps are scheduled to go into place, there will be a lot of students who are going to need to come up with another way of paying for graduate school than what’s been true in the past,” Jordan Matsudaira, director of the Postsecondary Education & Economics Research at American University, told Inside Higher Ed.
Research led by Matsudaira projects that programs such as dentistry, osteopathy and medicine will be particularly squeezed by the changes.
And given the many other pressures on university budgets, such as federal research funding challenges, federal efforts to limit international enrollment, and the looming demographic cliff, Matsudaira doesn’t expect universities to lower graduate tuition or significantly increase aid.
“I just think institution budgets are going to be under so much pressure from so many different things that it is just incredibly optimistic thinking, bordering on fantasy, to believe that they’re going to come up with substantial sources of funding to be able to either cut their graduate school prices or be able to fund their own loan program to enroll students,” he said.
(Some experts have suggested that states should get involved by providing low or no-interest loans as the Grad Plus loan option goes away.)
Matsudaira expects a “very rough transition period over this coming year” for students. He also expects graduate enrollment to decline.
“The question is how much does it reduce the number of students pursuing graduate school,” Matsudaira said.
Private loans are one option students are likely to turn to. He believes private loans will surge, with the market growing from around $3 billion a year currently to $10 billion in the near future.
But even private loans may prove difficult to obtain for some students.
“If I had to make predictions, I would guess that private student loan providers will make loans available to students attending programs with a good track record of earnings and loan repayment, but it is less certain whether students in programs that tend to lead to lower earnings and/or worse loan repayment outcomes will be able to access private student loans,” Lesley Turner, an associate professor at the University of Chicago Harris School of Public Policy, wrote by email.
She added private loans will have “fewer protections and less flexibility in repayment terms.”
Turner expects that the fallout of the changes to graduate school funding will not only decrease enrollment but may even prod some institutions to shutter such programs as headcount falls.
Credit rating agencies have also taken a dim view of what the changes will mean.
“Institutions with a greater proportion of graduate students will likely face more pronounced impacts from these policy changes, particularly if they serve disproportionately high levels of aid- and loan-dependent students,” Fitch Ratings concluded in its 2026 sector outlook, which it described as deteriorating. “While private loan providers can fill gaps created by federal limits, private offerings may nevertheless deter students, as private loans will likely be offered with less favorable rates and limited flexibility compared to what was available under federal programs.”