July 2026 Federal Loan Overhaul Eliminates Grad PLUS, Caps Professional Borrowing

Major federal student loan changes taking effect July 1, 2026, will fundamentally reshape how graduate and professional students finance their education at elite institutions. The One Big Beautiful Bill Act (OBBBA), also known as the Working Families Tax Cuts Act, eliminates the Graduate PLUS loan program for new borrowers and imposes strict new borrowing limits that fall well below the cost of many top-tier graduate programs.

The most significant change is the elimination of the Graduate PLUS loan program, which has allowed graduate and professional students to borrow up to the full cost of attendance at their institutions, minus other aid. According to Harvard University's Student Financial Services office, "Grad PLUS loans will be phased out beginning on July 1, 2026" for new borrowers. Yale School of Management confirms this, stating that "starting July 1, 2026, Grad PLUS loans will no longer be available to new graduate and professional (G&P) student borrowers."

In place of the unlimited Graduate PLUS program, strict new caps will apply. The Institute for College Access & Success (TICAS) reports that "graduate student borrowing will be capped at $20,500 per year, with a lifetime limit of $100,000." However, there appears to be a distinction between graduate and professional programs. American University's update indicates that professional students "may be eligible to receive up to $50,000 per academic year, with a lifetime maximum of $200,000," while Georgetown's financial aid office notes similar figures for professional students. The Law School Admission Council confirms that professional students will have access to Direct Unsubsidized loans with a maximum of "$50,000 per academic year."

These changes will particularly impact students pursuing high-cost professional degrees at elite institutions—including medical, law, and business schools—where annual costs often exceed $80,000. Families with students targeting these programs must now plan for significantly reduced federal loan availability starting with the 2026-2027 academic year.