We haven’t seen a change in federal student loan limits since 2008, when the Ensured Continued Access to Student Loans Act (ECASLA) was passed. With the passing of the One Big Beautiful Bill, OB3 or H.R.1, there have been significant changes to the federal student loan limits. While undergraduate annual and aggregate loan limits were not affected, there are significant impacts. The main impacts will be felt by parents who borrow Direct PLUS Loans for their dependent undergraduate students, and graduate or professional level students.
To get an idea of the true impact, let’s compare the new limits to what was borrowed in the 2024-2025 award year, from July 1, 2024 – June 30, 2025.
Parent PLUS Loan Limits
There are several new considerations for parents who plan to borrow Direct PLUS Loans to help their child pay for college. Starting on July 1, 2026, a child can only receive $20,000 in Parent PLUS Loans each year. And the overall aggregate limit is $65,000 in Parent PLUS Loan funds per child. These limits are based on what the child can receive, and it doesn’t matter how many parents borrow on their behalf
In the 2024-2025 award year, the average Parent PLUS Loan in the 2024-2025 was approximately $20,000. But one thing to note, averages can be a bit misleading. Some borrowers likely borrowed far more than $20,000. In addition, the aggregate limit can now become a bit tricky. A parent will not be able to borrow the maximum amount each year if their student is enrolled in a four-year program.
While there are other loan options, like private student loans, if a parent wanted to stay in the federal student loan program, they need to budget appropriately.
What Parents Should Consider
Now, for students already enrolled prior to July 1, 2026, parents will be able to borrow under the current rules and limits until the child completes their program, or up to three years.
If a student is starting a new program on or after July 1, 2026, parents consider:
- What can I afford without borrowing student loans?
- Setting up a time with their child to discuss financial support expectations for college.
- Types of schools where my child should apply.
- What other funding sources will I have access to.
Graduate and Professional Student Loan Impacts
When it comes to federal student loan programs, graduate and professional students have always been grouped together. With the passing of OB3, that is now changing when it comes to federal student loan limits in the Direct Unsubsidized Loan program. In addition, there has been a major change to federal student loan options for graduate and professional students – the Grad PLUS Loan program is being eliminated as of July 1, 2026.
Graduate and Professional Student Direct Unsubsidized Loan Limits
Graduate student will only be able to borrow up to $20,500 per year in Direct Unsubsidized Loans, and professional students will only be able to borrow up to $50,000. Health profession limits are being eliminated. When it comes to aggregate limits, a graduate student will have an aggregate limit of $100,000, and a professional student will have an aggregate limit of $200,000. This is in addition to anything borrowed for an undergraduate education. However, there will be a new overall lifetime limits of $257,500, which does not include Parent PLUS Loans.
In the 2024-2025 award year, the average amount of Direct Unsubsidized Loans received by a graduate or professional student was about $18,000. Because of the way the loans were offered, we cannot breakdown between graduate and professional limits. However, based on the average, the new annual loan limits seem to be within the range of the average received. But remember, as stated before, averages hid individual impacts and borrowing—and in combination with the elimination of the Grad PLUS Loan option, this could present other challenges.
Grad PLUS Loan Elimination
Grad PLUS Loans are being eliminated for any graduate or professional student beginning a new program on or after July 1, 2026. This will create a significant cost barrier for graduate and professional students, who have limited financial aid offerings in the form of grants and scholarships.
In the 2024-2025 year, the average Grad PLUS Loan received by a graduate or professional student was approximately $31,000. This could prove detrimental for some graduate and professional students, who likely borrowed a PLUS Loan when they exhausted all other federal student loan eligibility.
With overall aggregates for graduate and professional students, we may start to see students not return for multiple advanced degrees. Many graduate-level programs are typically two to three years in length. Professional programs, such as advanced medical degrees, often take even longer. Graduate and professional students typically don’t have the variety of financial aid options, like grants and scholarships, and often rely on student loans. We may see students rethink careers that have a financial cost barrier. And we also may see students unable to finish their programs due to financial barriers. Students who are unable to complete their degrees or programs often face significant financial challenges, especially if they borrowed student loans. While they may have the qualifications to attain a reasonably well-paying job, they could also carry significant debt without the higher-paying opportunities they sought to obtain.
What Graduate and Professional Students Should Consider
Graduate students who already began their programs before July 1, 2026, will be grandfathered into the current borrowing limits, and able to continue to borrow Grad PLUS Loans until they complete their program, or up to three years. So immediate impacts for those currently enrolled may not be felt.
But there are things to consider for a student who is starting a graduate or professional level program on or after July 1, 2026:
- Will I be able to afford my graduate or professional level degree?
- Are there ways I can reduce the cost of my program?
- Should I consider working while going to school to try to pay as I go?
- Are there more affordable programs that will result in the credentials I need for my career?
Are Loan Limits Good or Bad?
This is an interesting question. Earning a degree leads to a higher income potential. However, with escalating college costs, many students need to borrow significant amounts in student loans to attain credentialing. /p>
The federal student loan program allows access for families who may not qualify for a loan through a private lender. However, that has led to borrowing funds with an inability to repay. Which means, there are pros to loan limits, and cons.
The good side of loan limits is reducing the overall debt a borrower can take on in the federal student loan program. The challenging side is that loan limits may reduce access to certain higher education programs. Students from low- to middle- income families may struggle the most. They will need to find different approaches to attaining higher education, to ensure they can find ways to cover their educational costs.
There are arguments for both sides. While student loans offer access and opportunity to many students seeking to increase their earning potential, there are students who have graduated with overwhelming debt they struggle to repay. With many students struggling with existing student loan debt, it may not be the worst thing to have more planning go into the financial aspect of an undergraduate, graduate, or professional education