The federal government limits borrowing for graduate and professional students
Overview:
The US Department of Education finalized new postbaccalaureate student loan standards on Thursday, limiting graduate and professional students and parents who borrow money on behalf of their children to annual and consolidated loans starting July 1.
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The US Department of Education finalized new postbaccalaureate student loan standards on Thursday, limiting graduate and professional students and parents who borrow money on behalf of their children to annual and consolidated loans starting July 1.
Congress passed the loan last summer as part of the One Big Beautiful Bill Act. That law ended the 20-year-old Grad PLUS loan program, which provided nearly tens of thousands of dollars in additional loans to graduate students to cover room, board and other expenses.
Thursday’s announcement is the final step in the department’s regulatory process. It clarifies the difference between graduate students and professional students and creates credit scores for both categories.
Professional students, who have access to high rates of federal loans, study in 11 fields: pharmacy, dentistry, veterinary medicine, chiropractic, law, medicine, optometry, osteopathic medicine, podiatry, theology and clinical psychology. Federal loans for these students will be up to $50,000 per year and $200,000 in total.
Students in other degree programs will have access to $20,500 per year and $100,000 in total.
For parents who take out federal Parent PLUS loans on behalf of their children for college programs, the new rules limit loans to $20,000 per year with a lifetime cap of $65,000 per parent. Also, parents cannot consolidate Parent PLUS loans and repay them as a percentage of their income.
The ministry said the new rules are part of an effort to reform higher education by introducing “standard rules and regulations governing borrowing, and helping borrowers get in and keep paying.”
Reducing borrowing will have a positive impact on the cost of attending graduate school, the Department of Education says.
“Unrestricted borrowing has enabled institutions to increase tuition fees and fees without adequate restrictions, contributing to the increase in student debt,” according to the announcement. “Too often, students have gone into huge debt through programs with little or no return on investment, while institutions have limited incentives and tools to prevent over-borrowing or prevent excessive debt accumulation.”
According to Inside Higher Education, critics say the result of the loan calculations is that students will no longer be able to finance the most expensive, in-demand majors – many of which involve health care. As a result, enrollment in those programs will decline and the nation could face shortages of nurses, physical and occupational therapists, audiologists and more, critics say.
Other non-healthcare related degrees affected include education and social work, according to Inside Higher Education.
