More graduate students are likely to take out private education loans after new federal loan caps were established in President Donald Trump’s One Big Beautiful Bill Act.
That prospect is worrying, consumer advocates and other financial experts say — private lenders are likely to reject many student applicants because of their credit scores or income, and those who are approved could face more expensive borrowing terms.
“We cannot assume the private market will step in to fill federal loan gaps,” said Carolina Rodriguez, director of the Education Debt Consumer Assistance Program in New York. “That reality will directly impact who can afford to enter critical professions.”
The legislation passed in July eliminates the Grad PLUS federal loan program, which allowed graduate students to borrow up to the entire cost of their degree. Starting July 1, for most degrees, graduate students will be able to borrow only $20,500 per year, and up to $50,000 per year for professional degrees, such as dentistry and law, according to rules finalized by the Education Department on Thursday.
The Trump administration said in January that the unrestricted borrowing led to “steep increases in graduate school tuition.”
