Core Insights - Starting from the 2026-2027 school year, graduate students will lose access to the Grad PLUS loan program, necessitating alternative financing options for their education [1][10] - The legislation has reduced the overall loan amounts available to students and their families for educational expenses [1] Affected Students - Approximately 545,000 graduate students utilized Grad PLUS loans in the 2024-25 award year, indicating a significant number will be impacted by this change [2] - Students who borrowed Grad PLUS loans before July 1, 2026, can continue to borrow for up to three more years or until their program concludes [3] - Non-professional graduate students will face a borrowing cap of $100,000, while professional students, such as those in medicine and law, can borrow up to $200,000 in unsubsidized loans throughout their education [3] Implications of Changes - The reduction in federal loan access may compel graduate students to seek more expensive loans with unfavorable terms, potentially leading to long-term financial distress [4] - The new borrowing limits replace a previous cap of $138,500, which applied to all graduate students, but the new limit for non-professional students is unlikely to affect many, as the average debt for these students is $80,550 [5] - Professional graduate students, particularly medical students with average costs of $232,100, may face significant financing challenges due to the loss of Grad PLUS loans [6] Alternative Financing Options - Experts recommend that graduate students explore scholarships and grants before resorting to loans, as well as employment opportunities at their universities [9][10] - Students working for companies should check for tuition reimbursement programs, which can provide up to $5,250 in tax-free education assistance [11] - The Lifetime Learning Credit allows eligible taxpayers to deduct up to $2,000 of education expenses from their taxes, providing additional financial relief [12] Private Loan Considerations - If federal loans and grants are insufficient, private student loans may be an option, but students should be cautious about the terms [13] - State and nonprofit lenders often offer loans with lower interest rates compared to private loans, making them a preferable choice [14] - Private loans can offer competitive rates and flexible repayment options, but borrowers must understand the details before committing [16][17]

Core Insights - Major changes to the federal student loan system will take effect on July 1, 2026, primarily due to the Trump administration's One Big Beautiful Bill Act (OBBBA) [1] Group 1: Repayment Plans - New repayment options will be limited to two plans for loans disbursed after July 1, 2026, while existing borrowers can continue with three current plans until they transition [2] - Current income-driven repayment plans (PAYE, ICR, IBR) will phase out, with PAYE and ICR ending by July 1, 2028, leaving IBR and the new Repayment Assistance Plan (RAP) as options for future borrowers [4][3] - The RAP will set payments based on income, with potential forgiveness after 30 years [7] Group 2: Borrowing Limits - Federal borrowing limits will tighten starting July 1, 2026, with part-time students facing reduced limits based on enrollment status [11] - Current borrowers can access previous borrowing limits for three years or until program completion, with graduate students able to borrow up to $20,500 annually [12][16] Group 3: Grad PLUS Loans and Parent Loans - The Grad PLUS loan program will be eliminated after July 1, 2026, affecting graduate and professional students seeking financing [13] - Parent PLUS loans issued after July 1, 2026, will not qualify for Public Service Loan Forgiveness (PSLF), limiting options for future borrowers [17][18] Group 4: Deferment and Tax Implications - New loans will not be eligible for economic hardship or unemployment deferments starting July 1, 2027, and forbearance will be limited to nine months within a two-year period [20] - Student loan forgiveness may become taxable again after 2025, impacting borrowers who receive forgiveness in 2026 or later [21] Group 5: Preparation Steps - Borrowers are advised to review their current repayment plans, compare future options, and note key deadlines to prepare for the upcoming changes [22][23] - Parent borrowers should act quickly to access income-driven plans or PSLF eligibility, and consider potential tax implications of loan discharge [25]

Core Points - The "One Big, Beautiful Bill" will eliminate access to Grad PLUS loans for graduate students starting next school year, forcing many to seek alternative financing options for their education [1][2] - Approximately 545,000 graduate students utilized Grad PLUS loans in the 2024-25 award year, indicating a significant impact on this demographic [2] Affected Groups - Graduate students who borrowed Grad PLUS loans before July 1, 2026, can continue to borrow for up to three more years or until their program concludes [3] - Non-professional graduate students will face a borrowing cap of $100,000, while professional graduate students, such as those in medicine and law, can borrow up to $200,000 in unsubsidized loans throughout their educational career [3][8] Financial Implications - The new borrowing limits replace a previous cap of $150,000 for all graduate students, which may not significantly affect non-professional students, as the average debt for this group is $80,550 [8] - Professional graduate students, particularly medical students with average costs of $232,100, may struggle to finance their education without the Grad PLUS loan program [9][10] Recommendations for Financing - Graduate students are encouraged to explore grants, scholarships, and employment opportunities at their universities before resorting to loans [6][12] - Employer tuition reimbursement programs can provide up to $5,250 in tax-free assistance for education-related expenses [13] - The Lifetime Learning Credit allows eligible taxpayers to deduct up to $2,000 in education expenses from their taxes annually [14] Alternative Loan Options - If federal loans are insufficient, private student loans may be considered, with a recommendation to start with state and nonprofit lenders for potentially lower interest rates [15][16] - Private loans can offer competitive rates and flexible repayment options, but borrowers should carefully review the terms before committing [19][20]