Education Department caps graduate loans at $20,500 annually, eliminates Graduate PLUS program

The Education Department's Reimagining and Improving Student Education (RISE) Committee reached consensus on Nov. 6, 2025, on new regulations limiting federal student loan amounts as required by the One Big Beautiful Bill Act (Public Law 119-21), which President Trump signed on Jul. 4, 2025. Using the negotiated rulemaking process created by the Negotiated Rulemaking Act of 1990, the department convened stakeholders to try to reach consensus before issuing regulations. The rule creates different borrowing caps based on program type, with graduate students limited to $20,500 per year ($100,000 aggregate) and professional students limited to $50,000 per year ($200,000 aggregate) beginning Jul. 1, 2026.

Only a very limited number of degree programs would have access to the highest federal loan levels under the new rule. These include programs in medicine, law, and aviation that the department designates as professional programs. The department eliminated the Graduate PLUS program entirely, which previously allowed graduate students to borrow up to the full cost of attendance without limits.

Most graduate degree programs would face significantly lower borrowing limits than currently exist. This affects MBA programs, master's degrees in education, social work, public policy, and other fields where students currently borrow substantial amounts. Programs excluded from the professional category must either lower tuition, turn to private lenders, or recruit students with family wealth.

Industries including aviation have been actively lobbying to be included in the department's definition of professional programs that qualify for higher loan limits. A coalition of 45 aviation associations formally petitioned in Sep. for flight training programs to qualify as professional, arguing that accredited Part 141 flight programs require advanced licensure and should access the higher borrowing limits.

The negotiations were held in person for one week at the beginning of Oct. 2025 and a second week in Nov. 2025. Negotiated rulemaking is a process where the department convenes stakeholders to try to reach consensus before issuing regulations. The RISE Committee included representatives from universities, student advocacy groups, loan servicers, and the Education Department.

The rule responds to concerns about graduate student debt loads, particularly for programs with poor earnings outcomes. Critics argue unlimited federal loans enable universities to raise tuition knowing students can borrow more. The department hopes caps will pressure programs to lower costs or improve outcomes to remain viable.

Some education advocates worry the caps will reduce access to graduate education for low-income students who lack family wealth to supplement loans. Others argue caps will force programs to lower costs or improve outcomes. The elimination of Graduate PLUS loans particularly affects students in expensive programs who don't qualify for the professional student category.

AHAlex Holt, a committee member representing taxpayers and the public interest, proposed a more expansive definition of professional programs that would have allowed more fields to qualify for higher loan limits. The Education Department opposed the broader definition, reflecting a tension between protecting taxpayers from high-risk lending and responding to pressure from industries that want access to more federal debt.

Beyond capping annual borrowing, the RISE package would scrap the alphabet soup of income-driven repayment plans and replace them with a single Repayment Assistance Plan, while also capping Parent PLUS Loans for families. That means OBBBA is not just about drawing a line on how much students can borrow; it also rewires how quickly borrowers must repay and how much protection they have if their income never matches the debt their program encouraged them to take on.