🎯 In 30 seconds: Since July 1, 2026, new graduate borrowers cannot take Grad PLUS loans. Federal borrowing is capped at $20,500 a year for graduate students and $50,000 a year for professional students. So the first questions about a graduate program are now who pays (an assistantship, a fellowship or an employer) and whether the degree raises your pay by more than it costs.
Money you do not repay
- Assistantships: teaching or research jobs inside the department, often with a tuition waiver and a stipend. They are common in PhD programs and in some master’s programs. Ask each department how many students are funded and for how many years.
- Fellowships: merit awards from the university or outside groups, such as the National Science Foundation’s Graduate Research Fellowship. Deadlines are often in the fall, a year before you would start.
- Employer tuition assistance: under Section 127, an employer can pay up to $5,250 a year of your tuition, tax-free, for 2026. The course does not have to be job-related and can be graduate-level. Paying your student loans also counts toward the $5,250, and the 2025 law made that permanent for payments after 2025. The limit is indexed to inflation for tax years after 2026. Amounts above it are not excluded under Section 127, though some job-related training can be excluded another way.
- Tax credit: the Lifetime Learning Credit (up to $2,000 per return) applies to graduate courses. See the tax table in Paying for College.
The federal loan rules from July 1, 2026
| Who | Annual limit | Aggregate limit |
|---|---|---|
| Graduate student (most master’s and PhD programs) | $20,500 | $100,000 |
| Professional student (a list set in federal rules, including medicine, law, dentistry and pharmacy) | $50,000 | $200,000 |
| Lifetime cap, all federal student loans from undergrad onward (Parent PLUS excluded) | Not applicable | $257,500 |
| Grad PLUS | None for new borrowers | Ended July 1, 2026 |
Already enrolled? If you were enrolled in a program on June 30, 2026 and had received a Direct Loan for it before July 1, 2026, the old rules continue: $20,500 unsubsidized a year, plus Grad PLUS up to the cost of attendance. That lasts for the shorter of three academic years or the time left in your program. You cannot opt out, and switching to a new program ends it.
Starting in 2026–27, annual limits are also reduced for students enrolled less than full-time. New loans made from July 1, 2026 can be repaid only on the Tiered Standard plan or the Repayment Assistance Plan (RAP). The Paying for College repayment table explains both.
A worked example
A two-year master’s costs $38,000 a year in tuition plus $24,000 for living costs, so $124,000 in total. Federal loans cover at most $41,000 (2 × $20,500). That leaves $83,000 to come from savings, an assistantship, an employer or private loans. Private loans need good credit or a co-signer and have no income-driven repayment. If a half-time assistantship waives tuition, the gap disappears and the federal loans cover most of the living costs.
When a graduate degree pays
- Look up earnings for the exact program. College Scorecard shows earnings and debt by field of study, for graduate programs too.
- Count the lost salary. Two years of full-time study at a $55,000 job is $110,000 of pay you give up, on top of tuition.
- Check whether the job requires it. For licensed fields such as law, medicine or counseling, the degree is the entry ticket. For many business and technology roles, experience counts as much.
- Use the debt rule. Keep total borrowing at or below the expected first-year salary after the degree.
- Ask your employer first. A part-time program with $5,250 a year of tax-free help and no lost salary often beats a full-time program.