Analysis: Many Will Be Shut Out of Graduate Education Due to 'One Big Beautiful Bill Act'
By Maria Carrasco, NASFAA Staff Reporter
The elimination of the Grad PLUS loan program, due to the enactment of the One Big Beautiful Bill Act, will result in many more adults struggling to obtain a private student loan to fund their graduate education, according to a new analysis from The Century Foundation.
The analysis, conducted by Peter Granville, a fellow at The Century Foundation, explores how several provisions of the One Big Beautiful Bill Act, which President Donald Trump recently signed into law, would impact borrowers’ abilities to pay for their graduate education. Specifically, the law eliminates the Grad PLUS loan program, sets new annual borrowing limits for Direct Unsubsidized and Parent PLUS loans, and establishes lifetime limits on federal student loan borrowing.
Granville noted that the elimination of the Grad PLUS loan program would push borrowers to the private loan market. However, he wrote that some borrowers will ultimately struggle to get a private loan to fund their graduate education since private lenders are picky about who they lend to.
For the borrowers who do receive private loans, some could see high interest rates, reaching as high as 26%, depending on the borrower’s or cosigner’s credit score. Additionally, Granville noted, some private loans offer tough repayment terms, and unlike federal student loans, there aren’t any income-driven repayment or forgiveness programs, such as Public Service Loan Forgiveness (PSLF) and Total and Permanent Disability Discharge Loan Forgiveness.
“Unlike the federal government, private student loan companies are not beholden to the American public; they are only beholden to their shareholders,” the analysis reads. “And while the federal government does not discriminate based on a student’s family background, private lenders’ standard operating procedure is to issue more-favorable loans to students from high-income families and less-favorable loans to those from low-income families.”
Granville argued that the existing over-reliance on credit card debt to pay for education expenses could be exacerbated due to the elimination of the Grad PLUS loan program and new annual and lifetime borrowing limits. Some borrowers could be forced to choose between putting the uncovered expenses on credit cards, or dropping out entirely.
Notably, a borrower’s credit score (or their cosigner’s) will also impact their ability to get a private loan to fund their education. In Granville’s analysis, he noted that overall in the U.S., 38.2% of consumers have limited credit history or poor/fair credit. For consumers in low/moderate-income neighborhoods, 50.9% of those consumers have limited credit history or poor/fair credit.
Among consumers living in majority Black neighborhoods, 62.2% have limited credit history or poor/fair credit. For those in majority Native American neighborhoods, that number is 61.1%, and 48.1% in majority Hispanic neighborhoods.
In a state breakdown, Granville noted that Southern states have the highest share of families who would struggle to obtain a private student loan.
“To be sure, students from affluent families will continue to be able to pay for college just fine,” the analysis reads. “Colleges will compete for them even more, particularly with Grad PLUS off the table and Parent PLUS newly capped. It’s the less fortunate that we should worry about. The net effect will be fewer people enrolled in college—and a weaker economy as a result—while private lenders make off with record profits.”
Publication Date: 8/13/2025
Jason J | 8/19/2025 9:11:27 AM
Armand, did you check the factual reporting section of the link you provided? The Century Foundation has scores high on factual reporting.
Something to think about.
Armand R | 8/15/2025 12:12:39 PM
Spot-on Ben B!
I don't think anybody here has addressed the real issue - that higher education is too expensive. Reduce the cost! Problem solved! Schools can cut their costs by concentrating on educating students, rather than trying to indoctrinate them into a worldview, and rather than supporting billions of dollars worth of leftist ideologies (such as green "sustainable" campuses). Taxpayers should not be helping to fund self-destructive Marxist initiatives meant to undermine our society.
NASFAA, please stop the left leaning biased reporting https://mediabiasfactcheck.com/the-century-foundation/
Ben R | 8/15/2025 10:8:43 AM
It's one thing to support access to higher education with grants and scholarships, but it’s hard to argue in good faith for continuing to lend unlimited amounts under the PLUS program, supported by unlimited subsidies in repayment through IDR and then unlimited forgiveness through PSLF. The fact that most of these loans require IDR repayment subsidies is an acknowledgement that most of these borrowers can't actually repay these loans. That is asking for a blank check with no strings attached.
Due to the size of these loans, the repayment/non-payment subsidies end up being many multiples what an undergraduate student would receive on the Pell grant or their loans. There are caps at the undergraduate level for good reasons – reasons that make good sense across the board.
Nedi G | 8/13/2025 3:54:15 PM
It's heartbreaking to see anyone in the financial aid community celebrate the elimination of Grad PLUS loans. This will restrict access, decrease total enrollment and the total supply of active graduate programs. Many graduate programs will close and with lower supply come higher future tution prices and less discounting needed to compete. Classic supply side economics here. They know exactly what they're doing.
David is spot on. In ~7 yrs, this will have closed ~30% of graduate programs and only students backed by financially secure parents or employers will pursue these degrees.
Removing the education economic latter is not good for anyone in the society, regardless of where you sit unless you believe that having less doctors that come from poor families improves the quality and cost of healthcare.
Helen F | 8/13/2025 2:58:04 PM
I'm just stepping in to ask that we as financial aid professionals be thoughtful in our comments here. It does our profession and the students we serve no good to engage in unkind, unprofessional, and baldly partisan bickering. It troubles me to see my fellow aid administrators calling students dumb, among other statements made above. Our students are human beings. It is remarkably easy for someone without a great deal of financial savvy or generational college knowledge to end up in a very bad situation with respect to student borrowing. Please demonstrate compassion and remember that you represent all of us when you post negative comments.
Huge thanks to everyone who has been thoughtful, professional, and measured--I am grateful to work among an overwhelmingly wonderful group of individuals committed to improving the world we live in through affordable access to postsecondary opportunities.
Margaret B | 8/13/2025 1:28:31 PM
I would love for someone, literally anyone, to explain how eliminating Grad PLUS improves anything, in any way.
And no, "saving taxpayer dollars" is not an improvement - not when it's also going to cost millions of individual taxpayers massive amounts of money and worsen the nationwide shortages of professionals.
Alexandria J | 8/13/2025 12:33:18 PM
Right, because borrowers are not held accountable when taking out PLUS loans, like facing wage garnishment or losing their professional licenses after defaulting.
Why wasn't the resolution to fix the plethora of Grad PLUS issues, like lowering the interest cap and reducing the origination fee? Why get rid of them completely and force borrowers into the private sector where there are even less borrower protections? For most, education is the key to a better life and the paywall to access is getting bigger and bigger.
Ben B | 8/13/2025 12:17:21 PM
It doesn't take a Sallie Mae stan to realize that no single student has borrowed a zero-fee direct/Stafford loan since FFELP was axed and that the current PLUS rate of 8.94% with 4.2% fees is a horrendous loan with laughable credit approval standards. But hey, lets blame lenders for NOT making risky loans after we learned our lesson about what happens when they were pressured TO make risky loans (i.e. he sub prime mortgage crisis). I guess as long as there's a bank or credit union in existence to throw under the bus, the concept of personal responsibility and smart financial decisions can be ignored. Whatever
Alexandria J | 8/13/2025 11:56:28 AM
Ben, just admit you're a SallieMae stan. There's no way you can actually believe that students should be responsible for having an 800+ credit score to avoid 25% interest from a private lender. Likely without any credit history (because debt bad) and little to no income because they've been in school. And yet, private lenders shouldn't have any additional regulations or requirements but will be bailed out again (with our taxes) when needed?
Call me crazy, but I'd rather see my tax dollars help a graduate student eat, than ensure a private lender CEO maintain their profits.
Sam J | 8/13/2025 11:44:47 AM
There is already a shortage of doctors in this country: https://time.com/6199666/physician-shortage-challenges-solutions/ and teachers in this country: https://edworkingpapers.com/sites/default/files/ai22-631.pdf
Limiting graduate and professional loan access is going to make this worse. Hold onto your hats, this country is in for a rough ride because of this bill.
David S | 8/13/2025 11:23:00 AM
The bottom line here is that fewer students, especially fewer lower income students, will be able to earn an advanced degree. That is exactly what Republicans want; they’ve gone as far as saying so on a NASFAA podcast. This will not result in lower tuition rates (and let’s not forget that lots of Grad PLUS borrowing has been to cover living expenses, and no one seems to be rejoicing that this will lower rent, grocery or transportation costs).
That there are comments here taking an “it’s about time” attitude is demoralizing. If financial aid professionals can’t unanimously rally around making higher education more affordable, where are we headed?
Probably to the Republican vision of only rich kids on our campuses.
Ben B | 8/13/2025 11:11:49 AM
Anyone dumb enough to actually accept a 25% private loan rate cannot possibly put blame on a bank bailout that took place 17 yrs ago! Completely unrelated issues. A huge interest rate basically tells someone, "this really isn't a good idea., and no one if forcing you to do anything." The end of the GradPLUS simply means that people might actually have to choose an affordable graduate program and no longer support themselves on financial aid refund checks.
Jaime S | 8/13/2025 10:45:54 AM
I'm taken aback by some of the comments here. I'm sure there are plenty of affordable graduate programs available, but for what professions? For those looking to go into a professional career, like law, medicine, or other health professions, these programs often have a high price tag. While $50,000 in Unsub may be enough to cover tuition and fees, the costs of obtaining this type of education does not end there, so students who do not have other resources at their disposal will be forced into private lending to cover living expenses. I see this as a deterrent for students wanting to get a professional degree and with enrollment numbers already on the decline, a big issue for schools to fill their classes, which will eventually lead to a shortage of people in these professions.
Holly G | 8/13/2025 10:33:57 AM
I would be very interested in knowing the details of the Grad PLUS loans such as the percentage of students that default on those loans compared to DL Sub and Unsub loans with the dollar amounts of each of those. Also, I am very interested to know the percentages and dollar amounts of the Grad PLUS loans that are forgiven, especially compared to the DL Sub and Unsub. That would help put some perspective in the Grad PLUS situation. If the loans are paid back, especially at the current interest rates being so high, if defaults and forgiveness is low, how is this adding to federal debt?
Timothy D | 8/13/2025 10:21:29 AM
maybe it is the expensive graduate programs that will be shut out, not students.... students have plenty of options to get a graduate degree at a reasonable cost and do not need to take out $50,000-$100,000 per year in graduate student loans or turn to private loans because they can no longer get a grad plus loan.
Brad R | 8/13/2025 10:9:22 AM
Regarding reasonable ability - "...For the borrowers who do receive private loans, some could see high interest rates, reaching as high as 26%,.." Is 26% reasonable?
Regarding taxpayers being on the hook for default, it wasn't that long ago the taxpayers had to bail out the banks, lets revisit the financial crisis of 2008.
The Big Bank Bailout - Mike Collins of Forbes writes
"Most people think that the big bank bailout was the $700 billion that the treasury department used to save the banks during the financial crash in September of 2008. But this is a long way from the truth because the bailout is still ongoing. The Special Inspector General for TARP summary of the bailout says that the total commitment of government is $16.8 trillion dollars with the $4.6 trillion already paid out. Yes, it was trillions not billions and the banks are now larger and still too big to fail. But it isn’t just the government bailout money that tells the story of the bailout. This is a story about lies, cheating, and a multi-faceted corruption which was often criminal."
Full article at: https://www.forbes.com/sites/mikecollins/2015/07/14/the-big-bank-bailout/
So, maybe perspective is needed when talking about fault.
Daniel B | 8/13/2025 9:14:12 AM
Correct link to the report is https://tcf.org/content/report/the-fico-factor-gop-megabill-will-limit-who-gets-to-access-college/.
Ben B | 8/13/2025 9:4:37 AM
..."since private lenders are picky about who they lend to. ..." This another way of saying that private lenders, unlike the federal government, attempt to ensure borrowers demonstrate a reasonable ability to repay before dishing out thousands of dollars in unsecured loans. Let's face it, there are far too many people who have funded their life and lifestyle with GradPLUS over the years and guess who's on the hook for their default? We the taxpayer. If a person with a Bachelor's Degree in hand cannot find an affordable graduate program within the Direct Loan limits, it's their fault. Maybe the Century Foundation can offer a grant.
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