A major overhaul of the federal student loan system will take effect in July, introducing new borrowing limits and repayment structures.
The Department of Education finalized the changes on Thursday, April 30, implementing provisions first introduced under President Donald Trump’s Working Families Tax Cuts Act, which was signed into law in July, 2025.
The updated rules place tighter caps on borrowing for graduate and professional students, while also extending limits to parents who take out loans on behalf of their children. These loans make up a substantial portion of the federal student loan portfolio—roughly $125 billion of the total $1.7 trillion.
The Trump administration says the changes will curb excessive debt, make repayment easier, and pressure colleges to lower costs. But critics say the Education Department’s decision not to expand higher loan limits to more professional graduate programs will worsen workforce shortages, especially in healthcare, and make it harder for low-income students to access essential degrees.
Loan Limits
Under the new regulations, some students taking out federal loans on or after July 1, 2026 will face revised caps depending on their program of study.
Graduate students will be limited to borrowing $20,500 per year, with a total cap of $100,000 across their degree. Those pursuing professional degrees, such as medicine or law, will be allowed to borrow up to $50,000 annually, up to a maximum of $200,000 over the course of their studies. Previous rules set the same annual borrowing limit of $20,500 for both groups but allowed a higher lifetime cap of $138,500.
The overhaul also introduces new restrictions for Parent PLUS loans for the first time. Parents will now be limited to borrowing $20,000 per year per dependent student, to a total cap of $65,000. As well as this, most borrowers will face a new overall lifetime borrowing limit of $257,500, though some exceptions apply.
Officials say the goal is to curb excessive borrowing while maintaining access to higher education.
“This final rule will help ensure students can access higher education without racking up excessive loan debt, offer repayment options that better serve borrowers, and force institutions to reduce costs,” Under Secretary of Education Nicholas Kent said in a press release.
He said the changes address “longstanding challenges in higher education and federal student lending, including exorbitant tuition costs, unchecked borrowing, and a confusing maze of repayment options that too often leave borrowers with higher balances despite making payments” and will ensure access to higher education “without racking up excessive loan debt, offer repayment options that better serve borrowers, and force institutions to reduce costs.”
Graduate PLUS loans will now count toward the new lifetime cap unless borrowers qualify for a temporary exception tied to earlier rules. Meanwhile, loans taken out by parents on behalf of their children will not count toward a borrower’s personal lifetime limit.
Professional Degrees
New rules bring in more restrictive definitions of what qualifies as a professional degree. The administration has limited this category to 11 specific doctoral-level programs, including medicine, law, dentistry, and veterinary medicine.
Other fields included under the definition are pharmacy, optometry, osteopathic medicine, podiatry, chiropractic, theology, and clinical psychology.
The narrower classification has drawn criticism during the rulemaking process. After the legislation passed last July, the Department of Education sought public input as part of its formal review. During this period, many stakeholders raised concerns that the definition excludes programs such as social work, physical therapy and nursing, fields that often require advanced training but do not fall under the designated list.
Students in excluded programs will now be subject to the lower graduate borrowing caps rather than the higher limits available to professional degree candidates.
Criticism
Education bodies have warned the changes will impact access to higher education, particularly for low-income students, and could increase labor shortages in certain sectors.
“We are profoundly disappointed in the U.S. Department of Education’s decision not to expand professional graduate programs eligible for higher loan limits in finalized federal rulemaking associated with the One Big Beautiful Bill Act,” the Association of Public and Land-Grant Universities (APLU) President Waded Cruzado said in a statement on Thursday. “This rule will have significant impacts on students, institutions, and the nation’s workforce in critical sectors.
“Students, particularly those from low-income backgrounds, need access to affordable loans to complete vital programs that enhance their career prospects and make vital contributions to the nation’s workforce. The nation needs more graduates with advanced degrees in fields such as physical therapy and social work to meet workforce needs in underserved communities and the nation.”
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