New Student Loan Caps: Graduate students who need more money than the new federal loan limits allow may have another problem now. Getting a private student loan may not depend only on a good credit score. The type of degree a student is studying for could also matter.
A new National Bureau of Economic Research (NBER) working paper by University of Virginia economist Sarah Turner looks at how private lenders could react after the federal government stopped offering Graduate PLUS loans to new borrowers. The study connects federal borrowing information with later earnings from thousands of graduate programs. This gives researchers a closer look at which programs may be more attractive to private lenders.
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The research suggests students in programs such as law, business and medicine may have an easier time finding private funding. These degrees can cost a lot, but graduates often earn more after finishing school. Programs such as social work, counseling psychology and physical therapy may face more pressure because higher education costs don’t always come with the same jump in future earnings.
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The change comes from the One Big Beautiful Bill Act, which ended Grad PLUS loans for new borrowers starting July 1, 2026. Grad PLUS previously allowed eligible graduate and professional students to borrow up to their full cost of attendance after other federal aid was used.
Under the new system, most graduate students can borrow up to $20,500 each year. Their total federal borrowing limit for graduate study is $100,000. Students in the federally defined professional degree programs can borrow up to $50,000 per year and $200,000 in total.
The professional category is limited to 11 fields under the current rule. It includes medicine, law, dentistry, pharmacy, veterinary medicine, optometry, osteopathic medicine, podiatry, chiropractic, theology and clinical psychology. Programs such as nursing, physical therapy, social work, education and occupational therapy remain under the lower $20,500 graduate limit.
Turner’s NBER paper estimates that about 370,000 borrowers could be affected by the financing gap, with the total gap reaching around $8 billion a year. She wrote, “For the first time since 2006, a substantial share of graduate students will need to look beyond the federal program for financing.”
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Your Degree Could Become Part of the Loan Decision
Private lenders already look at things such as credit history, income and debt. A student may also need a co-signer. But the new research points to another factor that could become more important: how much graduates from a specific program usually earn.
A lender has to decide whether a borrower will be able to repay a large loan after graduation. Because of that, a degree that normally leads to a higher salary may look safer than a degree with lower average earnings. The school itself can matter too because graduates from different schools in the same field can have very different earning results.
The difference can be important for expensive graduate programs. Medical and dental programs can have very high costs, but strong graduate earnings can make those borrowers more attractive to lenders.
About 55% of physical therapy students have borrowed more than the new $20,500 yearly federal limit. Their median earnings are about $80,000. Medical and dental graduates in the study had median earnings ranging from about $115,000 to $173,000. Turner’s research finds a stronger link between borrowing and later earnings in fields such as law and MBA programs. In areas such as social work, counseling psychology and physical therapy, that relationship is much weaker.
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Expensive Graduate Degrees Result in Higher Earnings
Medical and dental programs are among the most expensive graduate programs. Still, their graduates generally have much higher earnings, which can make those loans look more attractive to private lenders.
For other programs, the picture isn’t as strong. A school may charge more without graduates seeing a large increase in pay. That can make private lenders more careful about offering large loans.
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Federal Loans Still Offer Benefits Private Loans Don’t
There is also a big difference between federal and private student loans. Graduate PLUS loans had relatively limited credit requirements compared with private loans. Private lenders often use stricter credit checks and may ask for a co-signer.
Federal student loans also come with protections that private loans generally don’t provide. These can include income-based repayment options and certain forgiveness programs. The new law has also changed the repayment system for new borrowers. Multiple income-driven plans are being replaced by the Repayment Assistance Plan, which can have a 30-year forgiveness timeline for eligible borrowers.
Turner said the shift toward private borrowing “likely creates winners and losers.” Students studying degrees with stronger earnings may have more lenders competing for their business. Others could have a much harder time finding enough money to finish school.
Graduate students already take a large share of federal student loan money. The College Board says graduate students receive about 48% of federal student loans even though they make up about 17% of all college students. The Consumer Bankers Association has argued that easier access to federal financing may have helped colleges increase prices and that ending Grad PLUS could put pressure on schools to lower costs.
