Washington, July 8, 2026, 09:06 EDT
- Grad PLUS loans will no longer be available to new grad borrowers under the new U.S. rules. Most federal grad loans now capped at $20,500 per year, or $50,000 for professional programs.
- For investors, the key issue is the funding gap that sits above federal limits, not only the tuition cuts.
- A court order keeps nursing, physical therapy, and several other health programs under the higher professional cap for now.
- Private lenders saw education-loan originations rising going into the rule change.
The loss of unlimited U.S. Grad PLUS loans is putting pressure on universities over pricing and forcing private lenders to assess credit risk, as the biggest funding shortfalls now appear in expensive medical, law, business and health programs.
New graduate borrowers can no longer access Grad PLUS. The government has set new unsubsidized federal loan caps: $20,500 per year, $100,000 total for most grad programs; $50,000 per year, $200,000 total for professional programs. There’s also a $257,500 lifetime cap on federal Direct Loans, Parent PLUS not included, according to school guidance based on final Education Department rules. Parent PLUS now has a $20,000 yearly limit and $65,000 total cap per dependent student.
| Borrower route | Before July 1 | New federal cap | Gap investors should track |
|---|---|---|---|
| Most graduate degrees | Grad PLUS covered full attendance after other aid | $20,500 a year; $100,000 total | Expensive master’s programs may need price cuts, internal aid, employer help or private loans |
| Professional degrees | Grad PLUS filled cost of attendance after other aid | $50,000 a year; $200,000 total | AAMC puts four-year med school sticker at $297,745 for public, $408,150 for private, so gaps run $97,745 and $208,150 before grants or savings |
| Parent PLUS | Cost of attendance beyond other aid | $20,000 a year; $65,000 total | Family financing for undergrad could hit limits before grad school |
The gap is key for investors. Lowering the cap can cut tuition revenue at schools that change pricing. Some students could shift to private loans, which depend more on credit, co-signers and school approval. The Washington Post opinion piece called the cap a price signal, saying Grad PLUS scrapped graduate loan limits in 2006.
UC Irvine’s Paul Merage School of Business has slashed tuition for two MBA tracks by tens of thousands, according to The Los Angeles Times. Santa Clara University School of Law rolled out new scholarships for incoming students. UC Berkeley’s Jennifer Delaney called it a possible “inequitable lockout” for students from low-income backgrounds. Sandy Baum at the Urban Institute said capping loans was needed but called the law “not well thought out.” Los Angeles Times
The Education Department says schools have started to respond. UC Irvine cut MBA tuition by over 20%, while University of Kansas boosted law-school scholarships and offered loans backed by its endowment. Santa Clara gave first-year J.D. students a $16,000 tuition scholarship. The department said these caps are aimed at lowering student debt and getting schools to bring down costs.
Judge halts Education Department’s new health-care loan rules. A federal judge stopped the department from switching to a narrower professional-degree standard that would have moved some nursing, physical therapy, and related programs to a lower cap for grad loans. PBS NewsHour, citing Washington Post reporter Danielle Douglas-Gabriel, said the court’s decision put parts of the new loan limits on hold, including caps aimed at some professional degrees.
The department’s new interim list now puts advanced nursing, occupational therapy, physical therapy, physician assistant, audiology and speech-language pathology programs in with medicine, law, dentistry, pharmacy, veterinary medicine and others as professional degrees while the court order is in place. The department said schools can still cap federal borrowing per program to avoid issues later if the lawsuit leads to more changes.
| Public company | Latest relevant data | Investor read |
|---|---|---|
| SoFi Technologies NASDAQ:SOFI | Q1 student loan volume came in at $2.6 billion, up 119% year over year, setting a new record for SoFi | Heavy demand ahead of the July 1 rule change now gives investors a baseline for graduate private-loan appetite after new limits |
| Sallie Mae NASDAQ:SLM | Q1 private education loan originations climbed 5%; 2026 outlook targets 12% to 14% origination growth | Credit exposure is direct here; CEO Jonathan Witter said there are “long-term growth opportunities” in private educational lending |
| Nelnet NYSE:NNI | Nelnet serviced $525.7 billion in education and consumer debt for 15.5 million borrowers as of March 31 | Business is more about scale and contract terms on its servicing than growing new loan volume |
| Covista (NYSE:CVSA) | Covista, previously Adtalem Global Education, said its shares started trading as CVSA from Feb. 24; the company calls itself a health-care educator | The court stay eases some near-term funding pressure for nursing and health programs, but caps at the program level stay on the radar |
Tuition data is mixed and matters for valuing education stocks. A 2023 NBER paper says Grad PLUS bumped up graduate debt, pushed some borrowers from private to federal loans, and lifted program prices. The paper didn’t find an effect on enrollment in current graduate programs or higher completion for borrowers with loan limits.
Graduate and professional students were 21% of higher-ed enrollment in 2021-22 but took in 47% of federal student-loan disbursements, The Century Foundation said. Outstanding Grad PLUS loans almost tripled over seven years, going from $37 billion to $90 billion. The median Grad PLUS balance jumped to $57,800 from $21,800, according to the group.
Lenders get more loan demand when students need to borrow past the federal cap. But those borrowers can be risky. They might need bigger loans, can’t get a co-signer, or are in degree programs that don’t lead to strong wages. Megan Walter, senior policy analyst at the National Association of Student Financial Aid Administrators, told WSJ Buy Side that the group most exposed here includes grad and professional students with “poor credit or low incomes.” The Wall Street Journal
For schools, it’s wait-and-see on whether other programs follow UC Irvine’s move on price or keep cuts to those with extra margin, endowment help or reach. Muni-bond buyers and education sector investors will look for a first take from fall grad numbers, discounting, school-led private loan flow and Q2 or Q3 origination outlooks.
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