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✅ Main takeaway:
Key takeaways
- The “big, beautiful bill” would restrict the amount of federal student loans available to college students next year. Students may have to take out riskier private loans to cover the rest of their studies.
- The average medical graduate student will not be able to obtain enough federal loans to cover the cost of his or her school and will likely have to take out tens of thousands of dollars in private loans.
- Some families who get Parent PLUS loans will have to use private loans, which typically have higher interest rates and will cost them approximately $5,000 more in interest during repayment.
Borrowers will be restricted in the amount of federal student loans they can take out, which could lead to more students — especially those seeking a medical degree — taking out private loans.
The “big, beautiful bill” generally reduces the amount of federal money college students can borrow starting in the 2026-27 academic year. Students may need to bridge the gap between the amount of money they can borrow and the cost of school.
Some advocates and experts say borrowers will have to take out private loans to cover the costs.
Why is this important to you?
Private student loans can be difficult to repay because they are not eligible for federal forgiveness programs, and the companies offering these loans have relatively more complaints than federal loan servicers. Many private loans also have higher interest rates than their federal counterparts, making repayment more expensive.
“Proponents of these lending caps say that by limiting federal aid, schools will be forced to hold back decades of price increases,” Issa Canchola Banez, policy director at Protect Producers, a borrower advocacy group, said at a Senate hearing last week. “However, data has shown that this is simply not the case.” “Instead, students and families will simply be pushed into more expensive, risky, and exploitative private student loan debt.”
Medical students will be the most affected
Congress’s “One Big, Beautiful Bill” reduces the current total loan limit of $138,500 for non-professional graduate students to $100,000. According to the most recent National Center for Education Statistics report, the average nonprofessional borrower with a master’s degree carries $80,550 in student debt after adjusting for inflation.
The bill increased the cap for graduate students seeking a “professional” degree, such as medical and law students. Professional graduate students will be able to take out up to $200,000 in student loans during their educational career.
However, the increased cap for professional students will not be enough to cover the average cost of medical school. The average student who completes medical school carries $232,100 in student debt, according to NCES.
Previously, graduate students could get Grad PLUS loans to cover the remainder of their costs of attendance, but since the bill eliminates that loan program after July 1, 2026, proponents say more medical students will have to use private loans.
Private loans will end up costing students much more in interest. For example, Federal Student Aid set the interest rate for a Grad PLUS loan during the 2025-26 academic year at 8.94%. Comparatively, the interest rate on private student loans varies, as high as 17.88%, depending on the credible loan market.
Parent Plus Limited loans may push more families to private loans for college degrees
The bill also introduces an annual limit on Parent PLUS loans, which parents use to help their college students pay for college. Previously, a student’s school had a maximum cost of attendance, but starting next year, parents can only get $20,000 a year.
Parent PLUS loans will also have a maximum total of $65,000, which most parents will not reach. However, 17.1% of Parent PLUS borrowers in 2020 borrowed more than $65,000, according to NCES.
The bill also allows higher education institutions to restrict the amount of federal loans their students can take out if they see their degree program as more likely to default once they graduate. Some students in fields such as education or public service may be limited in the amount of loans they can take out, but experts say that is unlikely to affect a large number of students.
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