White Paper: Additional Actions Need to Be Taken to Reform Graduate Education Financing
By Maria Carrasco, NASFAA Staff Reporter
After the enactment of the One Big Beautiful Bill Act (OBBBA), which made several sweeping changes to the federal student loan program, a new white paper examines what additional steps institutions and state and federal policymakers need to take to ensure that graduate education is accessible.
The Consumer Bankers Association (CBA) recently published a white paper that discusses the implications OBBBA has on graduate student lending and the ability of private lenders to meet new demand from graduate students. The white paper also issues several recommendations for institutions and state and federal policymakers to further improve the market for education funding.
The OBBBA, which was signed into law last July, implemented a slew of changes to the federal student aid programs, including the elimination of the Graduate PLUS loan program and new loan limits for graduate and professional students. Under OBBBA, graduate students’ Direct Unsubsidized Loan annual limit will remain at $20,500, but will have a new aggregate limit of $100,000. Professional students’ Direct Unsubsidized annual limit will be $50,000, with a new aggregate limit of $200,000.
The creation of these new loan limits has caused much debate in Washington, with Republicans arguing that the loan limits are reasonable caps meant to protect students and lower costs. Meanwhile, Democrats have argued that these loan limits could push some students into the private loan market, where benefits such as the Public Service Loan Forgiveness (PSLF) program and borrower defense protections are unavailable, and some students could altogether be pushed out of graduate education if they can’t receive a private loan.
In its white paper, CBA found the OBBBA reforms to the Grad PLUS program could impact roughly 2.5% of all new incoming graduate students.
CBA estimated the private loan market could underwrite student loans for a large majority of those students, at least 75%, who would have otherwise borrowed Grad PLUS loans, absent any changes in current tuition prices or increases in aid provided by schools and states, shifts in student school choices, or further policy reforms. However, that means about 25% of those students who would have otherwise borrowed Grad PLUS loans would not be able to have their student loans underwritten by private lenders.
CBA stated that OBBBA reform will help to drive down the cost of graduate education, but argued that additional steps need to be taken by institutions and policymakers, otherwise certain groups of students may struggle to fully fund their tuition through private student loan lenders. Further action should be considered by institutions and policymakers to make sure advanced degrees are accessible without reimposing federal debt burdens, CBA wrote.
“The reforms enacted by Congress mark meaningful progress, but they also reveal where better information, clearer standards, and targeted affordability efforts are needed to strengthen the system for students,” the white paper reads. “Specifically, more action is required to address the underlying cost of higher education and to improve lenders’ ability to responsibly underwrite new loans. Federal agencies can expand access to data on graduate outcomes and borrower financial profiles, while states and institutions can take steps to reduce costs or provide additional support.”
CBA made three recommendations. The first being that the federal government should provide greater transparency by producing samples of loan-level data on institutions and program performance, such as repayment rates, postgraduation income, and borrower credit scores. This data could enable private lenders to more efficiently price education loans. The federal government and loan servicers could also publish more granular student loan data to credit reporting agencies. This information could allow even greater ability for private lenders to effectively underwrite more borrowers, CBA argued.
There also needs to be more clarity for private lenders on program-level data. Greater clarity on the permissible use of program-level data would help ensure that private lenders can responsibly incorporate information to inform and protect students, while also supporting more affordable, competitive credit, CBA wrote.
Lastly, CBA recommended that states and institutions should continue to explore opportunities to address the rising cost of higher education, especially for programs and students that most need support. That could be through new approaches to grants and tuition assistance or reduction, or risk-sharing agreements and loan forgiveness.
Publication Date: 3/3/2026
Heather P | 3/4/2026 8:35:51 AM
^^ yes, 1000x yes.
John G | 3/4/2026 8:20:06 AM
All well and good but we've heard the "colleges need to control costs" line for many years. What if actual loan reform meant 1)no origination fees, 2) interest rates that either are zero or fixed at, say , 5% like the old Perkins program, 3) do not involve a credit check, and 4) have an income-based repayment rate as a default.
Call me crazy but there you have it.
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