The One Big Beautiful Bill Act (OBBBA) signed into law on July 4, 2025, severely curtailed federal loan availability for graduate and professional programs to make graduate education more affordable. The theory is that institutions increase tuition based on the availability of federal student loans resulting in graduate and professional students ‘over borrowing’ to pay for their programs.

While there is no evidence to support the first part of the theory, there is a case to be made that the combination of no annual or aggregate limit in the Graduate PLUS and the promise of loan forgiveness under many different programs has resulted in many students borrowing more than they can ever hope to repay. Whether you agree or disagree with this conclusion, the RISE rules will make financing graduate/professional school much more challenging.

So, what is changing when it comes to loans for graduate/professional students? Here is a summary of changes effective July 1, 2026:

  • Elimination of the Graduate PLUS program
  • For some programs, a reduction in the annual and aggregate Federal Direct loan borrowing limits
  • For some programs, an increase to the annual and aggregate Federal Direct loan borrowing limits

Exceptions to the rule changes can be made for students who are already enrolled in a graduate/professional program and borrowed their first Direct and/or Grad PLUS loan prior to July 1, 2026. These students will be subject to the current loan eligibility rules, including being able to borrow Grad PLUS, for up to three years. However, students who leave the program and return later, those who switch programs, or those who enter the same program at another institution will no longer qualify for the exception.

Other changes stemming from the RISE rules that will impact graduate and professional students down the line include:

  • Elimination of the economic hardship and unemployment deferments for loans made on or after July 1, 2027.
  • A new tiered standard federal loan repayment option and a new income-based repayment plan called Repayment Assistance Plan (RAP) available to all borrowers beginning July 1, 2026. For borrowers working towards forgiveness in the Public Service Loan Forgiveness (PSLF) program, RAP payments qualify if the borrower is working for an eligible employer.
  • Elimination of all other income-based repayment plans for federal student loans effective July 1, 2028.

Obviously, the biggest hurdle for new graduate and professional students is going to be bridging the gap between the annual maximum for federal Direct Loan and the cost of attendance. Additionally, some accredited health professions programs had higher annual and aggregate Direct Loan limits. Under the new rules, programs are divided into graduate programs and professional programs, where the latter have higher annual and aggregate borrowing limits — in some cases higher than the current amounts. But some of the health professions programs are feeling the double whammy of losing Grad PLUS and additional Direct Loan eligibility. The programs considered to be professional programs are:

  • Pharmacy (Pharm.D.)
  • Dentistry (D.D.S. or D.M.D.)
  • Veterinary medicine (D.V.M.)
  • Chiropractic (D.C. or D.C.M.)
  • Law (L.L.B. or J.D.)
  • Medicine (M.D.)
  • Optometry (O.D.)
  • Osteopathic medicine (D.O.)
  • Podiatry (D.P.M., D.P., or Pod.D.)
  • Theology (M.Div., or M.H.L.)
  • Clinical psychology (Psy.D. or Ph.D.)

Many of the comments received during the comment period were related to the ‘re-classification’ of programs like Nursing or MBA. ED has responded by clarifying that the classifications are not related to the academic content of the programs or whether those working in the field are ‘professionals,’ but rather the programs listed above generally require longer enrollment and share similar licensing and oversight for those entering the field that are different from other careers.

For graduate programs, the annual Direct Loan limit remains at $20,500; however, the lifetime borrowing limit for unsubsidized Direct Loans will be $100,000 and professional programs have annual and lifetime unsubsidized limits of $50,000 and $200,000, respectively. Both types of programs now have a lifetime limit of $257,500 for federal borrowing including undergraduate and Grad PLUS loans.

Determining eligibility is always more complicated when operating under two different sets of rules, so we’re lucky the National Association of Student Financial Aid Administrators (NASFAA) created a flowchart we can follow to ensure compliance.

Our students need our help more than ever and here are some ways we can make small changes to offer additional support:

  1. If you don’t already, start talking about the importance of maintaining good credit throughout graduate and professional school. Although Grad PLUS is credit-based too, private educational loans have more stringent criteria for eligibility and the cost of borrowing often decreases as the applicant’s credit score improves.
  2. Create a plan for counseling students who seem like they may not qualify for a private educational loan or who have already been denied. Do you have an institutional loan program or other funds you can set aside to help these students? If so, would you be able to do it for the length of the program for students unable to repair their credit? Can your students attend part-time so they can continue working? Having less than full-time status will further limit Direct Loan eligibility under the new proration rules, but additional earnings or employer reimbursement could result in needing less student loan funding.
  3. Continuing students need to be aware of what actions may make them ineligible to continue to finance under the old rules. If you give them the information today and it’s not applicable, it’s unlikely students will remember later, so work with your academic and faculty advisors to ensure students are referred to the financial aid office to discuss how their changes in academic plans will impact their federal loan eligibility.

The effects of the RISE rules will impact more than just individual students, so the entire campus will need to be prepared. For example, students in the application pipeline may choose not to enroll or be unable to enroll due to a lack of funds. Your admissions office will see a lower yield, and lower enrollment than expected will impact the budget across the institution. Your student accounts/bursar’s office should be prepared for more students having unpaid balances as well. Finally, even though students may be borrowing less from the federal programs, the total borrowing will often be the same with more expensive private educational loans filling the gap. This situation coupled with the elimination of deferment options, restrictions on forbearance, and expected higher payments in the remaining income-based repayment program is likely to result in more defaults and a higher cohort default rate (CDR) for your institution. There are no easy answers to these challenges. The best you can do is share information with your colleagues across campus, so everyone is as prepared as possible.

Of course, these changes will require an update to your procedures too. The Higher Education Assistance Group is here to help! Check out our services — from Interim Staffing to Compliance Review — then email us at info@heag.us to let us know how we can support you, your students, and your campus.

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