New federal rules cap student borrowing and phase out Grad PLUS loans |
The U.S. Department of Education has finalized new regulations that tighten federal student lending, including lower borrowing caps, fewer repayment options, and the phase-out of Grad PLUS loans, in line with recent legislation aimed at reducing student debt. A key feature of the rule is a narrow definition of “professional student,” which limits higher borrowing caps to 11 fields such as law, medicine, and dentistry, excluding major graduate disciplines like nursing and education despite widespread opposition. Students in designated professional programs can borrow up to $50,000 annually and $200,000 total, while other graduate students face significantly lower limits, including a $20,500 annual cap. The regulations also introduce a new aggregate borrowing cap of $257,500 for all federal student loans, with transitional allowances for some current borrowers, and replace existing repayment plans with two streamlined options: a fixed-payment plan and an income-based plan, with other plans set to be phased out by 2028. Officials argue the changes will curb excessive borrowing and help control tuition inflation, but critics warn that restricting federal loan access could push students toward more expensive private loans and exacerbate workforce shortages in excluded fields.
