Trump's big beautiful bill' caps student loans. Here's what it means for borrowers

• Starting in mid-2026, President Donald Trump's massive tax and spending package will set new limits on student loan borrowing.
• Experts predict this new policy could have lasting consequences for higher education.

President Donald Trump's massive tax and spending package will bring sweeping changes to federal student loans, in part by capping how much money people can borrow from the federal government to pay for college and graduate school.

Among other measures, the legislation, which Trump has called the “one big, beautiful bill,”sets new limits for students and their families. The following changes go into effect for new borrowers on July 1, 2026:

• For the first time, borrowers will have a total lifetime borrowing limit of $257,500 for all federal student loans.

• Unsubsidized student loans for graduate students will be capped at $20,500 per year with a lifetime loan limit of $100,000. Borrowing for professional degrees, such as those for doctors and lawyers, will be limited to $50,000 per year and $200,000 over a lifetime. Currently, graduate and professional students can borrow up to the full cost of attendance each year.

• Parent borrowing through the federal Parent PLUS loan program will be capped at $20,000 per year per student with a $65,000 lifetime limit. By current standards, parents of dependent undergraduates can also borrow up to the full cost of attendance each year.

• Grad PLUS loans will be eliminated entirely. These currently allow grad students to borrow up to their entire cost of attendance minus any federal aid.

These new limitations “will reshape how students borrow,” said Lesley Turner, an associate professor at the University of Chicago Harris School of Public Policy and a research fellow of the National Bureau of Economic Research.

“Students are either going to borrow less or make up the difference with private loans, or they will not start or complete a graduate program,” Turner said.

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Aspiring lawyers, doctors and dentists are most likely to be impacted by the new loan limits, Turner said. “It's quite a substantial cut in the loans students have access to.”

Roughly 9.3% of law students, 27.5% of medical school students and 60% of those in dentistry programs graduated with more debt in 2020 than is allowed under the new loan limits, according to calculations by higher education expert Mark Kantrowitz.

In fact, the average cost of medical school already exceeds $200,000. At private institutions, the average cost is closer to $300,000.

The new student loan caps “will affect many prospective medical and other health professions students and worsen the nation's persistent doctor shortage,” David Skorton, president and CEO of the Association of American Medical Colleges, said in a statement.

Other experts say the new loan limits may provide a much-needed check on soaring tuition costs, which have jumped significantly in recent decades — outpacing inflation and other household expenses — leaving some students feeling priced out of higher education.

Nearly every year, students and their families borrow more to cover the rising cost of attendance, a trend that has led to a ballooning of total outstanding student debt to more than $1.7 trillion.

With new limits on how much people can borrow, high-priced schools might have to lower tuition or increase aid, Turner said.

Private student loans likely to fill the gap

The limits on federal student loans are likely to spur students to find other lenders to bridge the gap.

“The new loan limits for Parent PLUS loans and graduate/professional school loans will shift some borrowing from federal loans to private student loans,” Kantrowitz said. “This will particularly impact low-income students, who are less likely to qualify for private student loans.”

Unlike federal loans, private student loan lenders rely on credit scores for the borrower — which could be the student, a parent or even another relative or friend as a cosigner — to determine eligibility and interest rate. “Access is by no means guaranteed,” Turner said.

As it stands, roughly 90% of student loans come from the federal government, and the remaining 10% are private student loans, according to the College Board.

Students often turn to private student loans once they have reached the federal student loan limits and still need additional education financing.

Already, private student loan volume is up significantly. Private student loan originations during the 2024-25 academic year jumped 8.63% from a year earlier, according to Enterval Analytics, a student loan data analysis firm.

Private loans can also come with fewer safety nets and less flexible repayment options compared to federal loans.