Graduate and professional students have long relied on Direct Grad PLUS Loans to fill the gap between limited Unsubsidized Loans and the sky-high cost of advanced degrees. These loans let you borrow up to your school’s full cost of attendance, minus other aid. But a House-passed budget bill now moving through Congress would end the Grad PLUS program for new borrowers after July 1, 2026 and impose strict lifetime caps on federal borrowing. So new incoming medical school students, law students, and students seeking other advanced degrees may need to plan ahead or pivot significantly. Below, Kaplan Law Firm—your dedicated student loan lawyer—breaks down how Grad PLUS Loans work today, how the pending legislation might restrict them tomorrow, and what proactive steps borrowers should take.
1. Grad PLUS Loans at a Glance
Grad PLUS Loans are federal, credit-checked loans available to graduate and professional students:
- Borrowing power: Up to the full cost of attendance (tuition, fees, living costs) after other aid is applied.
- Fixed interest rate: 9.08 % for loans first disbursed between July 1 2024 and June 30 2025—the highest since 1992.
- Origination fee: 4.228 % deducted up-front.
- Credit test, but no minimum score: Approval hinges on having no “adverse credit history,” not on hitting a specific FICO number. Borrowers with recent bankruptcies, charge-offs, or 90-day delinquencies can be denied unless they secure an endorser or document extenuating circumstances.
- Repayment & forgiveness options: Eligible for all federal income-driven repayment plans, Public Service Loan Forgiveness (PSLF), and one-time account-adjustment benefits—a key reason many clients seek a lawyer for student loans to optimize strategy.
2. Why Congress Wants to Limit Grad PLUS
The House Budget/Reconciliation Bill
Just this month, in May 2025, the House narrowly passed the “One Big Beautiful Bill Act,” a sweeping tax-and-spending package that would eliminate Grad PLUS loans for new borrowers beginning July 1 2026 and replace today’s open-ended borrowing with lifetime caps:
- Graduate students: $100,000 total federal debt
- Professional students (MD, JD, DVM, etc.): $150,000 total federal debt
- Aggregate cap across all loan types: $200,000 per borrower
Rationale—and Criticism
Bill authors say Plus-loan elimination will curb over-borrowing and force universities to rein in tuition. Critics counter that the loss of Grad PLUS will:
- Push students—especially in high-cost health, law, and STEM programs—into pricey private loans.
- Shrink access for first-generation and under-represented students who lack private-loan co-signers.
- Undermine federal safety nets like income-driven repayment (IDR) and PSLF, because private loans do not qualify for student loan debt forgiveness programs.
The bill now heads to the Senate, where changes are possible—but grad borrowers should plan for its passage.
3. Pros and Cons of Borrowing Grad PLUS in 2025
| Benefit | Risk |
| Borrow up to full cost of attendance with no annual or lifetime cap. | 9 %+ interest rate means high long-term cost. |
| Federal protections: IDR, deferment, forbearance, PSLF. | Pending legislation could cut off future borrowing and alter forgiveness rules mid-program. |
| No co-signer required unless you have adverse credit. | Adverse-credit denials can still occur; appeals require endorser or documentation. |
4. Strategies Before the Window Closes
- Maximize low-cost aid first
Exhaust scholarships, assistantships, and Unsubsidized Loans before tapping Grad PLUS. - Borrow what you’ll actually repay
Even without legal caps today, keep lifetime borrowing under the proposed $100k–$150k limits where possible to avoid private-loan reliance if the bill passes. - Document your program costs
Keep tuition invoices and Cost-of-Attendance letters; they’re critical if Congress later grandfathers existing PLUS loans but questions amounts borrowed. - Lock in forgiveness eligibility now
Grad PLUS loans taken before July 1 2026 should remain IDR- and PSLF-eligible even if the program closes to new borrowers. Consolidate promptly and enroll in an IDR plan to start the forgiveness clock.
5. How Kaplan Law Firm Can Help
As a dedicated student loan lawyer, Kaplan Law Firm can:
- Audit your credit profile and advise on fixing issues before you apply for Grad PLUS.
- Model repayment scenarios—Standard vs. IDR vs. private-refinance—so you borrow the minimum necessary.
- Navigate forgiveness pathways (PSLF, income-driven cancellation) and preserve eligibility if Congress changes the rules.
- Represent you in adverse-credit appeals or servicer disputes, leveraging our track record of protecting borrowers’ rights.
Need individualized guidance? Schedule a consultation today—and get peace of mind before policy changes take effect.
6. Key Takeaways
- Grad PLUS remains the only federal loan that fully covers grad-school costs, but its 9.08 % rate makes strategic borrowing essential.
- The House-passed budget bill would eliminate Grad PLUS for new loans after July 1 2026 and cap lifetime federal borrowing—dramatically reshaping graduate financing.
- Borrowers should act now: secure needed funding, enroll in IDR, and consult a lawyer for student loans to safeguard future forgiveness options.
Feel uncertain about your next steps? Contact us at (872)-278-3587 or visit financialrelief.com for a personalized review.
