Grad PLUS Loans Are Ending: What Borrowers Do Now

For years, grad PLUS was the quiet default for graduate and professional students. Unsubsidized loans covered part of the cost, and grad PLUS filled the rest, up to the full cost of attendance. That door closed for most new borrowers on July 1, 2026. A narrow exception remains, and it is worth understanding precisely, because the difference between qualifying and not can be a semester of enrollment.

What Actually Changed

The One Big Beautiful Bill Act phases out Direct PLUS Loans for graduate and professional students. Starting July 1, 2026, grad PLUS is no longer available to this group unless you qualify for a limited exception. This is separate from Parent PLUS, which follows its own rules.

The exception exists for students who were already mid-program when the rule changed, so they are not stranded. If you do not meet it, you cannot borrow grad PLUS at all, regardless of your credit or your school's cost of attendance.

The Exception, Precisely

You can still borrow under the limited exception only if all of these are true:

1. You were enrolled in your program of study as of June 30, 2026.
2. You borrowed a Direct Loan for that program before July 1, 2026.
3. You are currently enrolled at the same school in the same program.
4. You have had no break in enrollment since then. An approved leave of absence does not count as a break.

If you qualify, you can borrow up to your cost of attendance minus other aid, but only for your expected time to credential. Starting July 1, 2026, that means the shorter of three academic years or the remaining length of your program. It is a bridge for finishing, not a new open line of credit.

Your school makes the final call. The online PLUS application cannot determine whether you meet the exception, so confirm with your financial aid office before you count on the funds.

If You Do Not Qualify

The replacement is mainly the Direct Unsubsidized Loan, which has new limits from July 1, 2026:

• $20,500 per year for graduate students.
• $100,000 aggregate for students who have never been professional students.
• $200,000 aggregate for students who were previously professional students, less amounts borrowed as a professional student.
• $257,500 lifetime maximum across graduate and professional borrowing.

Professional students can borrow up to $50,000 per year with a $200,000 aggregate limit, less amounts borrowed as a graduate student. If the gap between the unsubsidized limit and your cost of attendance is large, the realistic options are scholarships and fellowships, graduate assistantships and tuition waivers, employer tuition benefits, or private loans. Private borrowing is the last resort, because it permanently gives up federal repayment and forgiveness options.

Terms If You Do Get One

For grad PLUS loans first disbursed between July 1, 2026 and June 30, 2027:

Feature	2026-27 terms
Interest rate	9.07% fixed for the life of the loan
Origination fee	4.228% of the amount borrowed
Subsidy	None. Interest accrues during school and deferment
Credit check	Yes. Adverse credit history requires an endorser or an approved appeal
Grace period	6 months after you graduate, leave, or drop below half time
Borrowing cap	Cost of attendance minus other aid

Because interest accrues from day one, the balance at graduation is larger than the amount borrowed. Paying the interest while you are in school, even partially, keeps it from capitalizing when repayment starts.

Repayment and Forgiveness

Grad PLUS is a federal Direct Loan, so it is eligible for income-driven repayment and for Public Service Loan Forgiveness, unlike Parent PLUS. That matters, because the 9.07% rate is high enough that a low income-driven payment can be the difference between managing the debt and drowning in it.

The 2026 plan rules apply to these loans. For loans first disbursed on or after July 1, 2026, only on-time payments under the Repayment Assistance Plan count toward PSLF, and payments under the new standard plan do not. If your goal is forgiveness, choose the plan with that in mind rather than the lowest headline payment.

Grad PLUS vs. Parent PLUS

They share a name and a rate, but they are different loans. Grad PLUS is borrowed by the student for their own graduate or professional program, and it is eligible for income-driven repayment and PSLF. Parent PLUS is borrowed by a parent for a dependent undergraduate, and it has far fewer repayment doors. If a parent is considering borrowing, read the Parent PLUS repayment guide first, because the rules are not interchangeable.

Common Mistakes

• Assuming the exception is automatic. It requires continuous enrollment in the same program at the same school, plus a prior Direct Loan for that program.
• Treating the exception as open ended. It covers your expected time to credential, capped at three academic years.
• Borrowing to the maximum because it is available. The 4.228% fee and 9.07% interest make unnecessary borrowing expensive.
• Filling the gap with a private loan first. Exhaust federal unsubsidized, school aid, and assistantships before giving up federal protections.
• Picking a plan that does not count for PSLF. For 2026 loans, the new standard plan does not count.

The Short Version

Grad PLUS is closed to most new graduate borrowers as of July 1, 2026. The exception covers students who were already enrolled and borrowing in the same program before that date, and it lasts only through their expected time to credential, capped at three years. Everyone else leans on the unsubsidized loan, school funding, and careful use of private credit as a last resort. If you do borrow grad PLUS, treat the 9.07% rate and 4.228% fee as real costs, and pick a repayment plan that matches whether you are chasing forgiveness or payoff.