Graduate Student Loan Program Eliminated
Graduate Student Loan Program Eliminated: Trump Administration Announces Major Education Changes. The United States is witnessing one of the most significant transformations in its education financing system in decades. Under President Donald Trump’s One Big Beautiful Bill Act (OBBBA), the Department of Education has officially approved major policy changes aimed at restructuring federal student loans.
Among the most notable shifts is the elimination of the Graduate PLUS Loan Program, alongside the introduction of new borrowing limits and a simplified repayment plan called the Repayment Assistance Plan (RAP).
Overview of Trump’s Education Reform
Announced on November 6, 2025, these changes mark a sweeping overhaul of America’s student loan system.
The Trump administration claims the reforms will protect students from excessive debt and better align education with job market demands.
However, critics warn the move could price out middle-class families from graduate education, deepening the divide between those who can afford higher studies and those who cannot.
Key Highlights of the “One Big Beautiful Bill Act (OBBBA)”
- Grad PLUS Loan Program Eliminated
Graduate students will no longer have access to the federal Grad PLUS Loan Program. This program previously allowed students to borrow up to the full cost of attendance, including tuition and living expenses.
- New Borrowing Limits
Graduate students: Up to $20,500 per year, with a lifetime cap of $100,000
Professional students (law, medicine, business): Up to $50,000 per year, with a lifetime cap of $200,000
The Department of Education believes these limits will help control tuition inflation and reduce reckless borrowing.
- Parent PLUS Loan Restrictions
Parents will no longer be able to borrow unlimited amounts for their children’s education. New borrowing caps are being introduced to prevent long-term financial burdens on families.
- Unified Repayment Assistance Plan (RAP)
The RAP replaces multiple old repayment and forgiveness programs (including many from the Obama and Biden eras).
This simplified system will begin in July 2026, linking payments more directly to borrower income and offering greater clarity in repayment options.
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Changes to the Public Service Loan Forgiveness (PSLF) Program
The Trump administration has also restructured the PSLF program, effective July 1, 2026.
Under the new rules, organizations engaged in “substantial illegal purposes”—such as those convicted of terrorism-related activities or providing services in restricted categories—will no longer qualify for PSLF benefits.
Payments made before July 1, 2026, will remain valid, but future eligibility will be subject to stricter verification by the Department of Education.
Several major cities, including Boston and Chicago, and multiple labor unions have already filed lawsuits challenging these PSLF reforms, calling them discriminatory against nonprofit and public-sector workers.
Impact on Students and Families
The removal of the Graduate PLUS Loan Program will directly affect middle-income students, especially those pursuing law, medical, and business degrees, where tuition costs far exceed standard federal loan limits.
Without full access to federal loans, many students may need to seek private lenders or reconsider costly degree programs.
Financial analysts warn this could lead to a two-tier education system — one for the wealthy and another for those unable to afford advanced studies.
Universities and Experts Respond
Universities and education experts have criticized the decision, arguing it could reduce diversity and accessibility in higher education.
Institutions may now turn to private lenders or scholarship programs to fill the funding gap.
Policy analysts say the reform represents a shift toward fiscal conservatism, reducing federal spending while encouraging private-sector involvement in education funding.
Introduction of the New Repayment Assistance Plan (RAP)
The RAP system aims to make student loan repayment more straightforward. Key features include:
Payments calculated based on borrower income
Minimum monthly payment requirement for all borrowers
Simplified structure replacing multiple complex repayment plans
The Department of Education expects the RAP to reduce default rates and make loan management more transparent.
Financial and Political Implications
This education overhaul may shift billions in interest revenue from the federal government to private lenders like SoFi and Sallie Mae.
Critics believe the policy reflects a broader Trump-era agenda to limit federal control over education and promote private competition.
This move also follows the Supreme Court’s Biden v. Nebraska (2023) decision, which restricted the Department of Education’s authority to cancel student debt without congressional approval.
What Borrowers Should Do Now
The Department of Education has confirmed that current Grad PLUS borrowers will keep their existing loan terms.
However, from July 2026, new postgraduate borrowers must adapt to stricter rules and borrowing limits.
Steps Students Should Take
Review Your Financial Plan:
Assess tuition costs, scholarships, and post-graduation income to plan within new loan limits.
Contact Your University:
Ask about new scholarships or funding programs created in response to the reforms.
Prepare for RAP Transition:
Update your loan account and select a repayment plan before July 2026.
Verify PSLF Eligibility:
Ensure your organization still qualifies for PSLF under the new guidelines.
Expert Opinions
Deputy Secretary Nicholas Kent said:
“This act will revolutionize higher education. It ensures universities remain accountable and students avoid unnecessary debt.”
Meanwhile, financial expert Alex Beene noted:
“Many old forgiveness programs are being phased out and merged into RAP. Students must prepare now to adapt to the new system.”
Conclusion
The end of the Graduate Student Loan Program marks a historic shift in America’s higher education system.
While the Repayment Assistance Plan and borrowing limits aim to reduce debt and simplify repayment, they may also limit access for middle-class students.
In the long term, these policies could make education funding more sustainable — but at the cost of affordability for many.
The coming years will reveal whether this reform truly protects students or creates new financial barriers.
FAQs
Q1. What major change did the Department of Education announce?
The Department eliminated the Grad PLUS Loan Program and imposed new limits on Parent PLUS Loans under Trump’s One Big Beautiful Bill Act (OBBBA).
Q2. When will the new Repayment Assistance Plan (RAP) take effect?
The RAP will begin in July 2026, replacing all previous repayment and forgiveness programs.
Q3. How much can graduate and professional students borrow now?
Graduate students: $20,500/year (maximum $100,000 lifetime)
Professional students: $50,000/year (maximum $200,000 lifetime)
Q4. What happens to the PSLF program?
The PSLF will exclude organizations engaged in illegal or restricted activities from forgiveness eligibility.
Q5. How will these changes impact students?
Borrowers will face tighter limits, fewer forgiveness options, and a streamlined repayment system focused on income-based responsibility.