It’s no secret that the federal government under the current administration has taken an antagonistic stance toward higher education. Some of this has taken the form of direct action against colleges and universities themselves.
In other cases, the impact has been felt through the undermining and dismantling of systems and structures that support higher ed. The elimination of grant funding, new federal loan borrowing limits, and changes to federal loan forgiveness and repayment options have significant implications for higher education in general, but the application of these policy changes will affect graduate students disproportionately. As we see these changes implemented, it’s important to recognize the extent to which they are putting graduate education out of reach for a significant proportion of Americans.
First came the elimination of grant funding which supported academic and scientific research. In early 2025, the federal government handed over review of those grants to the newly formed Department of Government Efficiency (DOGE). DOGE targeted federal grants which contained content that they deemed DEI-focused, determinations which we now know were made by searching for key terms using ChatGPT.
While this did not affect graduate education exclusively, federal grants are often a source of funding that universities use to support tuition costs for graduate students. At my own university, for example, this led to the suspension of a grant designed to cover the tuition costs of graduate students training to become school counselors in high-need schools. In some cases, this loss of grant funding led universities to limit graduate student enrollment or even rescind admission offers.
More recently, the passage of the so-called “One Big Beautiful Bill Act” (OBBBA) has had a tremendous impact on federal loans for graduate students. One element of this bill creates new caps on student borrowing through Federal Direct Unsubsidized Loans starting July 1 of this year. For those that ED considers “graduate students,” those loans will continue to be $20,500 per year but now with a lifetime limit of $100,000. For “professional students,” those limits are $50,000 per year with a lifetime limit of $200,000. It should also be noted that the Department of Education’s definition of what constitutes a “professional student” has also been controversial, with the exclusion of nursing programs being a notable example.
Another component of OBBBA which is sometimes overlooked is loan proration. Prior to the bill, graduate students could borrow up to the full $20,500 per academic year. However, students who are not able to enroll full-time will have their loans prorated and their eligibility for federal loans will be much lower.
A compounding factor of these new limitations is the new lifetime borrowing cap of $257,500 for all federal student loans, including any undergraduate loans, but excluding Grad PLUS and Parent PLUS loans, regardless of whether the loans have already been repaid, forgiven, or discharged. For students who received federal loans for their undergraduate education, this cap significantly reduces their borrowing levels if they seek federal loans for graduate and professional programs.
The OBBBA also discontinues Grad PLUS loans, a key source of funding for graduate and professional students used to cover costs of attendance beyond what was covered by federal unsubsidized loans. This limits resources for prospective graduate students whose universities cannot fund them and who lack the means to cover the cost of their graduate education on their own.
Although there are “legacy” provisions built into the legislation for students who signed up for federal unsubsidized loans and Grad PLUS loans prior to July 1, which would allow them to maintain their same levels of pre-OBBBA access, excluding proration which will apply to all student borrowers, those students lose their legacy eligibility if they withdraw from or skip enrolling in an academic term, or if they take a leave of absence. As a result, graduate students who step away from their programs, even briefly, or due to circumstances beyond their control, could find themselves with no financial path back.
Those who do qualify for federal loans can no longer count on flexible repayment options or loan forgiveness that would have been available to them in the past. On March 10, a U.S. district court judge invalidated the federal loan repayment plan known as SAVE (Saving on A Valuable Education). Established by the prior administration, SAVE was an income-based federal loan repayment plan which offered low monthly payments. And there’s no legacy provision to be had here, as the current administration has already announced that students enrolled in the SAVE plan will be required to choose new repayment plans.
Similarly, Public Service Loan Forgiveness eligibility has also been restricted. In a rule announced by the U.S. Department of Education, starting on July 1, they will take steps to “ensure that PSLF benefits go only to borrowers employed by organizations that genuinely serve the public.” The effect of this rule is that the Department of Education Secretary will ultimately have the unilateral authority to decide which organizations are eligible. Based on what we’ve seen so far, it’s not unreasonable to expect that organizations not ideologically aligned with the administration will lose their eligibility.
With new limitations to federal grants and loans, some prospective graduate students will have to turn to private lenders. But private loans also come with more strict borrowing requirements. Fewer students are eligible for approval without co-signers, and that’s often a challenge for graduate students. Also, in the past, some private lenders have taken advantage of students in need. Although the Obama administration established the Consumer Financial Protection Bureau to protect student borrowers and hold private lenders accountable, the current administration ordered CFPB employees to halt all work and attempted to fire 90% of Bureau staff, an attempt which was only prevented by intervention by the federal court.
Additionally, during the first Trump administration, Education Secretary Betsy DeVos set the bar higher for student borrowers seeking to demonstrate that they had been harmed by unethical lending practices. And, in early March, the Government Accountability Office released a report highlighting inadequate oversight of loan servicers by the current Department of Education following their massive layoffs. Under these circumstances, why wouldn’t we expect to see predatory lenders returning to the industry to target graduate students?
So what is the cumulative effect of these changes? In short, it significantly reduces access to graduate education for those students who don’t already have the means to pay for graduate school themselves. According to a December 2025 report by the Philadelphia Federal Reserve Bank Consumer Finance Institute, roughly 28% of graduate and professional students have borrowed funds above the new limits set by OBBBA, and of those, 40% could fail to secure private loans without a cosigner. Unfortunately, colleges and universities don’t have the resources to close that gap, though many are doing what they can. Between heightened concerns around higher ed costs, the lack of federal funding, higher hurdles for repayment, and uncertainty about replacement funding sources, this could very well have a chilling effect on students’ willingness to pursue graduate education.
Author’s Note: This article reflects the state of federal regulations as of April 2026. However, due to evolving information coming from the U.S. Department of Education and litigation being brought against the federal government due to some of these policies, some details may change.
Brian J. Gallagher is Assistant Dean of Graduate Enrollment at Loyola University Maryland and a member of the Insight Into Academia Editorial Board.
