Private Lenders Set to Gain From New Graduate Loan Caps
President Trump’s Big Beautiful Bill eliminates Grad PLUS loans for new borrowers after July 1 2026 and imposes lifetime borrowing caps of one hundred thousand dollars for most graduate students and two hundred thousand dollars for professional degrees. Analysts at the Urban Institute note that many master’s and doctoral students currently borrow well above those limits, which means thousands will need new sources of funding.
Private lenders are moving quickly. Navient and SoFi both told investors they expect a “significant expansion” of new business once the caps take effect, pointing to an addressable market worth several billion dollars a year. Lawmakers led by Senator Ron Wyden have asked lenders to detail their underwriting practices, warning that variable rates and the loss of federal protections could burden borrowers with higher costs over time.
Industry groups argue that private loans will fill only genuine funding gaps and note that interest rates have fallen for top-tier borrowers. Consumer advocates counter that fewer safety nets, such as income-driven repayment or public-service forgiveness, will widen wealth gaps among graduates. Ascent Funding estimates that the shift could push more students toward co-signers and require schools to bolster scholarship aid to remain competitive.
The long-term impact hinges on how many universities adjust tuition or expand institutional grants and whether Congress revisits the caps after the first cohort feels the pinch. For now, private lenders appear to be the clear winners, while students face a more complex and potentially costly borrowing landscape.