Graduate Students Face Major Shake-Up as Trump Ends PLUS Loan Program

A sweeping overhaul of the United States' student-loan system has triggered nationwide concern after the elimination of the Graduate PLUS Loan Programme.

The change, finalised by the US Department of Education under President Donald Trump's One Big Beautiful Bill Act, is being described by education experts as one of the most significant shifts in federal higher-education funding in decades.

Announced on 6 November 2025, the reform aims to simplify repayment and limit borrowing for postgraduate students. Yet critics warn that it could push America's middle-class families out of graduate school entirely, creating a divide between students who can self-fund and those who cannot.

What the Policy Change Means

In an official press release, the Department of Education confirmed that the Graduate PLUS Loan Programme, which allowed students to borrow up to the full cost of attendance, will be discontinued beginning 1 July 2026. In its place, new borrowing caps will restrict how much postgraduate and professional students can take on through federal loans.

The overhaul also reduces the number of repayment options from seven to two: a Standard Repayment Plan and a new Repayment Assistance Plan, or RAP, designed to streamline repayments and link them more closely to income levels. Public Service Loan Forgiveness rules will also be tightened, excluding some employers from eligibility.

According to an Education Department statement, the changes are intended to simplify a complex system and 'better align higher education with workforce needs.'

Middle-Class Students Feel the Impact

The elimination of the Graduate PLUS Programme is expected to hit middle-income students hardest, particularly those in medicine, law, and doctoral programmes where tuition often exceeds standard federal-loan limits. Many of these students relied on Grad PLUS loans to cover the full cost of attendance after exhausting other aid options.

Analysts warn that the changes could create a two-tier higher-education system: one for affluent students who can afford full tuition and another for those forced to abandon their plans due to new loan restrictions.

Universities and Experts Sound the Alarm

University associations across the country have criticised the move, warning it will reduce diversity and accessibility in advanced education. Institutions are now expected to explore partnerships with private loan providers to bridge the funding gap for affected students.

Policy experts argue the reform marks a departure from previous efforts to expand educational access, instead prioritising fiscal conservatism and private sector involvement.

Financial and Political Fallout

The elimination of Grad PLUS loans could redirect billions of dollars in potential interest revenue from the federal government to private lenders such as SoFi and Sallie Mae. Economic analysts warn this shift could create long-term consequences for student debt management and affordability.

Critics argue the overhaul reflects a broader move by the Trump administration to limit government involvement in higher education following the Supreme Court's 2023 ruling in Biden v. Nebraska, which curtailed the Department of Education's authority to cancel student debt without congressional approval.

Reports noted that the administration's approach aligns with its broader goal of reducing federal expenditure and promoting private competition in the lending sector.

Next Steps for Borrowers

Current borrowers under the Grad PLUS programme will retain their existing loan terms, according to the Education Department. However, new postgraduate borrowers from July 2026 will face stricter annual and lifetime borrowing limits.

Advocacy groups are urging students to explore institutional scholarships, work-study opportunities, and income-based repayment plans. Legal experts expect further litigation over accessibility and potential discrimination claims once the new rules take effect.

Originally published on IBTimes UK