Keep Factually independent
Whether you agree or disagree with our analysis, these conversations matter for democracy. We don't take money from political groups - even a $5 donation helps us keep it that way.
How did the reclassification affect student loan borrowing limits and repayment options for impacted degrees?
Executive summary
The One Big Beautiful Bill Act (OBBBA) and subsequent Department of Education rulemaking narrowed which students are eligible for larger loans and replaced the open-ended Grad PLUS with fixed annual and lifetime caps—graduate students face $20,500 annual/$100,000 lifetime limits while professional students face $50,000 annual/$200,000 lifetime limits beginning July 2026 [1] [2]. Rulemakers also debated how tightly to define “program of study,” a decision that affects whether institutions can set loan caps by major versus whole credentials; negotiators reached consensus language during the RISE committee sessions in November 2025 [2] [1].
1. How borrowing limits changed: from open-ended Grad PLUS to strict caps
Before OBBBA, graduate borrowers could use Grad PLUS to borrow up to the cost of attendance; under OBBBA and the Department’s proposed rules, Grad PLUS is eliminated and replaced with absolute annual and aggregate limits: $20,500 per year and $100,000 lifetime for graduate students, and $50,000 per year and $200,000 lifetime for professional students [1] [2]. NPR and the Department both report that these new caps will materially reduce maximum borrowing available to many graduate and professional students [3] [1].
2. Who counts as a “graduate” vs. “professional” student — why definitions matter
The Department and negotiators made defining “graduate” and especially “professional” student a central dispute because professional programs (medical, law, etc.) get significantly higher caps; how regulators define those categories affects access to higher borrowing for particular programs and students [2]. The Institute for College Access & Success (TICAS) explained that the debate over definitions was driven by institutions’ concerns and that the outcome will determine how many students qualify for the larger professional limits [2].
3. Program-of-study reclassification: institutional limits and appeals
ED’s rulemaking narrowed “program of study” for institutional loan limits so colleges can set limits by specific majors rather than entire credentials, which could mean some students in expensive majors face lower available institutional loan aid [2]. That narrowing interacts with institutional processes like reclassification or appeals—schools and students may have new incentives to appeal classification decisions because classification determines the loan caps that apply [4] [2].
4. Repayment options and the new Repayment Assistance Plan (RAP)
OBBBA and the RISE committee work aim to simplify repayment plans by sunsetting older plans and creating a new Repayment Assistance Plan (RAP). The Department’s announcement frames RAP as a simpler, income-based option to replace a “confusing maze” of plans; ED stated RAP will be created as part of the implementation package [1]. External explainers note RAP will be income-based, with up to 30 years for repayment eligibility for new loans disbursed on or after July 1, 2026, but emphasize that only new loans will qualify for some features [5].
5. What changes apply to new loans vs. existing borrowers
Multiple sources stress timing limits: the caps and RAP eligibility primarily affect new loans disbursed after July 1, 2026, while existing borrowers remain under prior rules for loans already made unless regulatory text specifies otherwise [5] [1]. Harvard’s financial aid office, for example, cautions there are “no changes to federal student loans for the 2025–26 academic year” and that anticipated changes take effect July 1, 2026 [6].
6. Trade-offs and policy perspectives — access vs. fiscal guardrails
Supporters in ED framed these changes as necessary “limits and guardrails” to curb unsustainable borrowing, eliminating Grad PLUS excesses and simplifying repayment [1]. Critics, as highlighted by TICAS and policy analysts, warn that capping borrowing could constrain access to costly but high-value graduate programs for low- and middle-income students and make it harder to finance professional degrees [2] [7]. The Bipartisan Policy Center noted the shift from annual borrowing limits to a median-cost cap for programs in the House package—an alternative design that raises its own access and transparency questions [7].
7. Practical implications for students and institutions
Students in expensive graduate or professional programs should expect reduced federal borrowing options after July 2026 and may need to seek alternative financing (private loans, institutional aid, scholarships) or adjust program choice—an outcome NPR and Forbes flagged as making it “harder for lower- and middle-income borrowers to attend pricier graduate programs” [3] [8]. Institutions will face new administrative burdens: defining programs of study, setting institutional loan limits, and managing appeals and reclassification processes outlined in broader higher-education rulemaking [2] [4].
Limitations and what’s not in these sources
Available sources do not mention final regulatory text details beyond the consensus outcomes reported in RISE and ED statements, nor do they provide comprehensive guidance on how servicers will implement RAP or exact transition rules for borrowers with existing PLUS loans—those operational details remain to be published by ED (not found in current reporting) [1] [2].