How Federal Graduate Student Loans Work
Here’s a quick look at what the federal system offers graduate students today, and what’s changed. Below, you’ll find the differences between Direct Unsubsidized and Grad PLUS loans, and between annual and aggregate loan limits.
Unsubsidized vs. Grad PLUS Loans
Graduate students haven’t had access to subsidized loans since 2012. Until this year, that left two federal options: the Direct Unsubsidized loan and the Grad PLUS loan. For new borrowers, only the Direct Unsubsidized loan remains.
| Direct Unsubsidized Loan | Grad PLUS Loan | Direct Subsidized Loan | |
|---|---|---|---|
| Available to grad students? | Yes | No, eliminated for new borrowers July 1, 2026 | No, undergraduate only |
| Credit check required? | No | Yes, adverse credit history review | No |
| How much you could borrow | Set by annual and aggregate limits | Up to full cost of attendance, minus other aid | Set by annual and aggregate limits |
| When interest starts | At disbursement | At disbursement | Government pays it while you are enrolled at least half-time |
Keep in mind that unsubsidized graduate loans start accruing interest the moment funds are disbursed, including every semester you’re still in class.
Annual vs. Aggregate Loan Limits
Federal graduate loan limits are the annual and lifetime caps on how much a graduate or professional student can borrow in federal Direct loans.
The annual limit is the most you can borrow in a single academic year. The aggregate limit is the most you can borrow across your entire program.
It’s easy to plan around the annual number and get surprised by the aggregate one. If you borrow the annual maximum every year of a five-year program, you’ll hit the aggregate ceiling before you finish, and prior degrees count toward it too. Plan the total first, then divide it by the number of years you expect to be in school.
New to federal student aid? The official source is studentaid.gov, and your school’s financial aid office can walk you through your specific package.
What Changed July 1, 2026: Grad PLUS Phaseout and New Borrowing Caps
The One Big Beautiful Bill Act (OBBBA), signed into law in July 2025, made two changes to graduate borrowing. It eliminated the Grad PLUS loan for new borrowers, and it set new annual and aggregate caps on Direct Unsubsidized loans. Both took effect July 1, 2026, with the details worked out through the Department of Education’s RISE negotiated rulemaking.
It helps to understand why the caps exist. Since 2006, Grad PLUS let graduate students borrow all the way up to their school’s full cost of attendance. Because the federal government would lend whatever a program cost, schools had little pressure to hold prices down.
The Department of Education and independent economists have linked open-ended borrowing to rising graduate tuition, and the new caps are meant to ease that pressure.
In practice, this means new graduate and professional borrowers can no longer count on federal student loans alone to cover the full cost of attendance at most programs. How big your shortfall may be depends on your degree type and what your program costs.
Graduate and Professional Loan Limits for New Students: Before and After
Here’s what changed, side by side. Find your borrower type to see how much your annual and lifetime ceilings moved.
| Borrower Type | Old Annual Limit | New Annual Limit | Old Aggregate Limit | New Aggregate Limit |
|---|---|---|---|---|
| Graduate (general): master’s, PhD, EdD | $20,500 unsubsidized, and Grad PLUS up to cost of attendance | $20,500 unsubsidized | $138,500* including undergraduate borrowing, and Grad PLUS up to cost of attendance | $100,000 |
| Professional: law, medicine, dentistry, and similar | $20,500+ unsubsidized (higher for some health fields), and Grad PLUS up to cost of attendance | $50,000 unsubsidized | Up to $224,000* for some health fields, and Grad PLUS up to cost of attendance | $200,000 |
| Grad PLUS | Available up to cost of attendance | Eliminated for new borrowers (July 1, 2026) | Up to cost of attendance, minus other aid received | Not applicable |
| Overall federal lifetime cap (new) | No comparable combined cap | Not applicable | Not applicable | $257,500 across all federal student loans, excluding Parent PLUS |
What These Limits Don’t Cover
These caps apply to federal Direct loans only. Institutional grants and scholarships, employer tuition benefits, and private student loans all sit outside them and don’t count against your federal ceiling.
Grad PLUS is gone for new borrowers as of July 1, 2026, though some currently enrolled students keep limited access under a legacy exception. We cover that in the “Already Enrolled” section below.
Graduate vs. Professional Student Loan Limits: Which Ones Apply to You
The difference between the two classifications is $29,500 a year and $100,000 over a program, so it’s worth confirming which one applies to you before you build a budget around either number.
Who Counts as a Graduate Student
Most graduate programs fall in the general category: master’s programs and academic doctoral programs, including the PhD and EdD. The cap is $20,500 per year and $100,000 aggregate.
Who Counts as a Professional Student
The higher $50,000 annual and $200,000 aggregate limits are meant for professional students. Which programs qualify is currently being decided in court.
When the RISE rule was written, “professional” meant a narrow list of 11 fields built around medicine (MD and DO), law, dentistry, pharmacy, optometry, podiatry, chiropractic, veterinary medicine, theology, and clinical psychology.
On June 24, 2026, the U.S. District Court for the District of Columbia issued a preliminary stay that paused several of the criteria the Department used to build that list. In response, the Department expanded the list of programs treated as professional to 29, adding nursing (MSN and DNP), physical therapy, occupational therapy, physician assistant, anesthesiologist assistant, audiology, speech-language pathology, and athletic training, among others.
There are two caveats. The expansion is temporary and tied to the stay, so it can shift again as the case moves forward. The Department also told schools they may hold newly reclassified programs to the graduate cap while litigation is pending, which means being on the list doesn’t guarantee your school will certify you at the higher limit.
If your program isn’t on the original 11-field list, confirm your current classification and your school’s certification decision before you plan. Our full breakdown of which degrees count as professional has the complete list and the questions to ask.
Are MBA Programs Professional?
No. MBA programs are generally classified as graduate rather than professional for federal loan purposes, so the $20,500 annual and $100,000 aggregate caps apply. Classification can vary by institution, so confirm with your financial aid office.
The distinction shows up in the math. Professional students typically face a higher cost of attendance and get a higher cap, so their gap calculation looks quite different from a general graduate student’s. An MBA candidate at a program that costs $80,000 a year is working with the same $20,500 as a master’s student in a program that costs $30,000.
If you’re financing an MBA, Abe® offers MBA loan options built for that gap if scholarships, grants and federal aid fall short.
How to Calculate Your Graduate School Funding Gap
Work through these four steps in order, using your actual numbers.
Step 1: Find your Cost of Attendance (COA). Your COA is on your school’s financial aid page, in your offer letter, or in the Net Price Calculator on your school’s site. It includes tuition and fees, housing and food, books and supplies, transportation, and personal expenses. Schools set their own COA, not the federal government, so it varies widely by program.
Step 2: Subtract grants, scholarships, and savings. Count fellowships, departmental awards, TA and RA stipends, tuition remission, employer tuition benefits, and whatever you’ve saved. What’s left is your net cost.
Step 3: Subtract your federal loan limit. Use the table above based on your classification. Use the annual limit for a single-year estimate and the aggregate limit to plan the whole program.
Step 4: The remainder is your funding gap.
Funding Gap = Cost of Attendance − (Grants + Scholarships + Work-Study + Institutional Aid + Savings) − Federal Loan Limit
Depending on your program and school, that gap can run from a few thousand dollars to $30,000 or more per year.
If you don’t have an aid letter yet, use your school’s published COA as a planning estimate. If you’re already enrolled, your aid package may need to be revised under the new limits, so contact your financial aid office and request an updated award.
Already enrolled and recalculating? Jump to “Already Enrolled? Grad PLUS Legacy Rules and Your Next Steps” below.
How to Cover Your Grad School Funding Gap
It’s best to work through these options in order. Every dollar you cover this way is a dollar you don’t have to borrow. For a more complete guide, read our blog on every financial aid alternative worth considering before a private student loan.
Option 1: Institutional and Program-Specific Aid
Start inside your own department. Departmental grants, research stipends, and fellowships are often awarded on a rolling basis, and some go unclaimed simply because nobody asks.
Then look outside it. Professional associations and field-specific foundations fund discipline-specific awards with much smaller applicant pools than national scholarships. If you work, ask HR about employer tuition assistance. Under current IRS rules, employers can provide up to $5,250 per year tax-free, and many eligible employees never claim it.
Not every student will qualify for these options, and award timelines don’t always line up with tuition deadlines. They’re still worth pursuing before you borrow.
Option 2: Income and Work Arrangements (Assistantships and Tuition Remission)
Teaching and research assistantships often include tuition remission on top of a stipend, which can eliminate a large share of the gap on its own. Some programs also support part-time or co-op work structured around your coursework.
This isn’t realistic for every program. Clinical rotations, cohort-locked schedules, and full-time practicum requirements leave little room for outside work. Check what your department allows before you count on it.
Option 3: Program Cost Adjustments
If you’re still choosing among programs, in-state tuition can cut your COA substantially. Hybrid or online tracks at the same institution sometimes cost less than the residential version of the same degree, and adjusting your enrollment pace can spread costs across more years.
Option 4: Private Student Loans for Grad School
A private student loan covers the gap between your federal aid and your actual cost of attendance. It’s meant to complement federal loans rather than replace them, and it doesn’t carry federal protections such as income-driven repayment or forgiveness. That’s the tradeoff to weigh.
When you compare private graduate loans, look at:
- Fixed versus variable interest rates
- In-school deferment options and how long they last
- The grace period after graduation
- Cosigner requirements, and specifically whether the lender offers cosigner release
- Prepayment penalties, or the absence of them
Compare rates and borrower benefits across several lenders before you apply.
Abe graduate loans were built for this gap. They cover the difference between federal limits and your full cost of attendance, with cosigner release;13 terms of 5, 7, 10, 15, or 20 years;3 up to 60 months of in-school deferment;20 increased loan limits for graduate and professional programs;1 and coverage for graduate, professional, and certificate programs.
Check your rate in minutes with no impact to your credit score.2
Already Enrolled? Grad PLUS Legacy Rules and Your Next Steps
If you built a financial plan around the old limits and it no longer holds, you’re not alone, and you’re not out of options. Here’s what’s protected and what to do next.
What the Grad PLUS Legacy Exception Protects
Nothing changes retroactively. Loans that have already been disbursed aren’t reduced or recalled.
Beyond that, there’s a legacy exception. If you had a federal Direct loan disbursed for your program before July 1, 2026, and you stay continuously enrolled in the same program at the same school, you keep access to Grad PLUS and the prior borrowing limits for the lesser of three academic years or your remaining time to completion.
Two conditions make this work: same program, same school. Transferring or switching programs generally ends the exception.
One more note for part-time students: new borrowers enrolled less than full time have their annual loan amounts prorated.
If You Are Mid-Program
Three things to do this term:
- Request an updated financial aid package that reflects the new limits.
- Recalculate your funding gap using the four steps above, with your current numbers.
- Map your remaining semesters against both the annual and aggregate limits.
One mistake to avoid: don’t borrow the annual maximum in your early semesters on the assumption you’ll have the same access later. Aggregate limits apply across your whole program, not each year in isolation, and using them up early leaves your final years underfunded.
If You Have Already Reached Your Federal Loan Limit
Private loans are available mid-program, not just at the start of an academic year. If you hit your federal ceiling in October, you don’t have to wait until the following fall to cover the difference.
The funding picture is more complicated than it was a year ago, but it’s still a number you can calculate and a gap you can close.
How Abe Graduate Loans Help Cover the Funding Gap
The change is real, the gap is measurable, and every option above is worth exhausting first. What’s left is a question of which combination fits your situation.
If you’ve worked through federal aid, grants, scholarships, savings, and institutional options and a gap remains, Abe offers private student loans for graduate, law, MBA, medical, dental, and healthcare professional programs, with aggregate limits up to $350,000 and up to $500,000 for medical and dental students.1 You choose how you pay while you’re in school, including a flat payment or full deferment until after you graduate.3
If a private student loan is part of your plan, check your rate with no commitment and no impact to your credit.2
Frequently Asked Questions
Do the new federal student loan limits apply to loans I already took out?
No, not to loans that have already been disbursed. Those aren’t reduced or recalled. What happens to your future borrowing depends on the legacy exception. If you had a federal Direct loan disbursed for your current program before July 1, 2026, and you stay continuously enrolled in the same program at the same school, you may keep access to Grad PLUS and the prior limits for up to three academic years or your remaining time to completion, whichever is shorter. If your program runs longer than that, the new limits apply to the years after the exception ends, so plan your later years around the new caps.
What is the difference between annual and aggregate loan limits?
The annual limit is the most you can borrow in one academic year. The aggregate limit is the most you can borrow in total across your whole program. Aggregate limits matter more for planning, because using them up early can leave later years underfunded.
How much can a graduate student borrow now?
Most graduate students can borrow up to $20,500 per year in federal unsubsidized Direct loans, with a $100,000 aggregate cap for graduate study. Professional students in qualifying fields can borrow up to $50,000 per year and $200,000 in aggregate, within an overall federal lifetime cap of $257,500.
Who counts as a professional student?
The Department of Education’s original list covered 11 fields, including law (JD), medicine (MD), osteopathic medicine (DO), dentistry (DDS or DMD), pharmacy (PharmD), veterinary medicine (DVM), optometry (OD), podiatry (DPM), chiropractic (DC), clinical psychology (PsyD), and theology.
Following a June 24, 2026 federal court order, the Department temporarily expanded that list to 29 programs, adding nursing (MSN and DNP), nurse anesthesia (DNAP), physical therapy, occupational therapy, physician assistant, anesthesiologist assistant, audiology, speech-language pathology, and athletic training, among others. Divinity (MDiv) and rabbinical studies (MHL) qualify, while general theology and theological studies programs don’t.
This expansion is interim and applies only while the court’s stay is in effect. Schools may also choose to certify newly added programs at the graduate cap while litigation is pending, so confirm your classification with your financial aid office.
Can I still get a Grad PLUS loan?
No, not as a new borrower. Grad PLUS was eliminated for new borrowers as of July 1, 2026. Some currently enrolled borrowers keep limited access under the legacy exception described above.
Can I take out a private student loan in the middle of my program?
Yes. Private student loans are available mid-program, as well as at the start of an academic year, so you don’t have to wait to cover a gap that opens up mid-term.