Grad PLUS Loans Eliminated: What Fall 2027 Grad School Applicants Need to Know

Graduate school application season is here, and this year's applicants face a very different federal loan system. Graduate PLUS loans, which once let graduate students borrow up to the full cost of attendance, were eliminated for new borrowers on July 1, 2026. With Grad PLUS loans eliminated for new borrowers, students who start a master's, doctoral or professional program in fall 2027 will be limited to Direct Unsubsidized Loans with new annual and lifetime caps.

The changes come from the 2025 budget reconciliation law and the Education Department's final rule, known as RISE, which took effect on July 1, 2026. Here is what applicants need to know.

The New Graduate Student Loan Limits

The Education Department's rule, first proposed in the Federal Register in January, keeps the graduate annual limit where it was but adds lower lifetime caps and a separate track for professional degrees:

• Graduate students: up to $20,500 a year in Direct Unsubsidized Loans, with a $100,000 aggregate limit for graduate study.
• Professional students: up to $50,000 a year, with a $200,000 aggregate limit, for programs that qualify as professional degrees.
• Lifetime cap: a $257,500 lifetime maximum on federal student borrowing. Parent PLUS loans are counted separately.
• Grad PLUS: no longer available to new graduate or professional borrowers.

Grad PLUS used to fill the space between the $20,500 unsubsidized limit and a program's full cost of attendance. Without it, a student in a $60,000-a-year master's program could have about $39,500 a year to cover from savings, school aid, employer support or private loans.

Who Keeps Grad PLUS After It Was Eliminated

Current students are not cut off overnight. The Education Department's loan limits FAQ describes an "interim exception." Students who were enrolled in a program as of June 30, 2026, and received a Direct Loan for that program before July 1, 2026, can keep borrowing under the old rules, including Grad PLUS, for their "expected time to credential." That is the lesser of three academic years or the time left in the program.

The exception applies to the specific program. A student who finishes one degree and starts a new graduate program in fall 2027 would generally borrow under the new limits.

Which Programs Count as Professional Degrees

The higher $50,000 limit only applies to professional degree programs, and that definition is in court. On June 24, 2026, a federal court in Washington, D.C., temporarily blocked part of the department's definition. While the case continues, the department published an interim list of programs treated as professional. It includes medicine, dentistry, Pharm.D. pharmacy, law, M.Div. programs, clinical psychology, physical therapy, occupational therapy, physician assistant programs and several nursing degrees, including the MSN and DNP.

The department called that list temporary and told schools they may consider capping these programs at graduate-level limits while litigation continues. Applicants to nursing, therapy and psychology programs should ask each school which limit it is using.

How Grad School Applicants Can Plan for the Gap

• Ask for the full cost of attendance. Compare tuition, fees and living costs with the $20,500 or $50,000 annual federal limit.
• Ask about assistantships and fellowships. Funded research and teaching positions matter more now that federal loans cover less.
• Check employer tuition benefits if you plan to study while working.
• Compare private loans carefully. They lack federal protections such as income-driven repayment and Public Service Loan Forgiveness eligibility.
• File the FAFSA. Graduate students still need it for federal loans and many school-based awards. The 2027-28 FAFSA is already open.
• Strengthen your application. Merit aid often depends on the whole application, from test scores to recommendations. Our guide on graduate school recommendation letters can help.

Repayment Has Changed Too

New loans made on or after July 1, 2026, repay under a different menu of plans, including the Repayment Assistance Plan (RAP) and a new Tiered Standard plan. Borrowers already in repayment can also cut their interest rate by enrolling in auto pay before the end of the year, as explained in our report on the student loan autopay discount.

What Applicants Should Do Now

• Budget without Grad PLUS for any program that starts after July 1, 2026, unless you qualify for the interim exception.
• Confirm the loan limit each school will use, especially for programs on the professional degree list.
• Prioritize funded offers and ask about assistantships before you accept.
• Watch the court case. The professional degree list could change.

Information is from Education Department guidance and Federal Register documents as of Oct. 14, 2026. Loan rules are complex, so confirm your situation with each school's financial aid office. This article is not financial advice.