New federal rules sharply cap how much graduate students can borrow, forcing an immediate sea change in how students evaluate attaining an advanced degree, with some scrambling to pay tuition — and for colleges, prompting concerns about future access to their programs.
Under the previous rules, graduate students could take out federal loans for as much as they needed to cover the cost of their master’s and doctorate degrees, including tuition and living expenses, often taking on crushing, long-term debt that contributed to a national epidemic in defaults.
Effective July 1, borrowing is restricted to $20,500 annually, with a $100,000 cap. Those pursuing designated professional degrees, including law, medicine and dentistry, are limited to $50,000 a year with a $200,000 cap.
The median total cost for a master’s degree in 2020 — before inflation skyrocketed — was $24,250, while professional degrees came in at $59,076, though some universities — particularly private institutions — charge far more, according to EdTrust, a nonprofit that advocates for equity in education.
The Trump administration clamped down on borrowing — part of its overhaul in the federal student loan programs — saying that the previous uncapped loans for graduate school spiraled tuition upward and the limits will encourage colleges to trim costs.
Already, at least two graduate school programs in California, including the UC Irvine graduate business school, have lowered costs.
But some education experts said the changes are more likely to restrict access to learning, especially for lower-income students who have trouble qualifying for or paying private loans.
“It will not lock everybody out,” said Jennifer Delaney, an education finance expert at UC Berkeley. “But there will be an inequitable lockout of folks from lower-income backgrounds.”
“Folks who earn graduate degrees earn higher levels of income,” said Wil Del Pilar, EdTrust senior vice president. If lower-income households can’t afford to attend, “you are creating limits on who people can be.”
One student’s dilemma
Diego Bollo views graduate school as a way to fast-track a career as an economic policy analyst and make him stand out to potential employers. He’s already been accepted to UCLA’s Luskin School of Public Affairs in the fall.
He’s also unsure if he’ll go. Federal loans, he said, will no longer cover his full cost of attendance, which he estimates would be at least $51,000 annually, including living expenses.
Bollo, the son of a domestic worker and a line cook, said he’s applied to work as a teaching assistant and graduate researcher, which would waive the cost of his tuition. But if those don’t come through, he said he would have to turn to expensive private loans, which he doesn’t consider worth the return on investment.
“I wouldn’t do the program,” said Bollo, who served as president of the UCLA Undergraduate Students Assn. Council before graduating this year. “It’s been a bit stressful … I think the education would be super beneficial.”
Part of that benefit, Bollo said, would be to gain connections he didn’t have growing up in Los Angeles’ Pico-Union neighborhood.
“Education for me has always been a pillar for socioeconomic mobility,” he said.
A few colleges lower costs
At least several colleges have already trimmed costs. The Education Department highlighted several Wednesday in a news release proclaiming that the “cycle of over-borrowing is over.”
Among them is the UC Irvine Paul Merage School of Business, which cut tuition for two of its MBA programs by tens of thousands of dollars. One degree with flexible hours for mid-level professionals is now under the new limits.
Ian Williamson, dean of the business school, said the new federal policy played a role in the decision as well as student scheduling preferences. He said the college lowered costs in part by requiring fewer courses and focusing on what “the students really need to be productive in their workplace.”
At Santa Clara University School of Law, where tuition is roughly $66,000 a year for full-time students and $52,000 for part-time, Dean Michael Kaufman said he asked donors to step up. The donors delivered. All incoming full-time students will now receive a $16,000 scholarship, with part-time students receiving $12,500.
Concerns about the future
Delaney at UC Berkeley said she doubts colleges will take such action at a large scale, because educating students is people-intensive with limited ways to cut costs.
“There hasn’t been a technological solution that has … really made us profoundly more productive than the teaching and learning function from the Middle Ages,” Delaney said. “It’s a sage on the stage in a lecture hall.”
Some professional programs such as nursing cap how many students can be supervised by one instructor, which means schools can’t easily jam-pack additional students into one class, she said.
John Aubrey Douglass, a senior research fellow at UC Berkeley’s Center for Studies in Higher Education, tied the loan caps to a broader assault on higher education by the Trump administration that “will further erode the financial model of higher education institutions.”
He said while there might be some “modest” tuition reductions, the changes will likely “lead to further labor shortages in key professional fields, such as healthcare.”
According to the Assn. of American Medical Colleges, the median cost for four years of medical school is nearly $300,000 at public institutions and nearly $410,000 at private schools.
Bradley Curs, an associate professor of higher education policy at the University of Missouri, predicted some programs — especially at costlier private institutions — could close as people choose not to enroll because they can’t access big enough loans. He thinks students might opt instead for less expensive public schools close to home.
Sandy Baum, an expert in education finance with the Urban Institute, said the new loan limits are unreasonably low, but uncapped borrowing was a real problem and some restrictions are necessary.
“You could be in graduate school getting a master’s degree in history and borrow $100,000 a year for three years and you were never going to pay that back,” she said. “They needed limits, but the legislation that they passed is not well thought out.”
Schools that charge more than the new federal limits for degrees in fields that tend not to be high-paying — like journalism, teaching or social work — could face significant obstacles in recruiting students.
How California universities will ultimately adjust
USC spokesperson Megan Jordan said in a statement the university has been informing students of the new loan limits and provided a list of “preferred” private lenders they can use.
The financial aid office has also “met with academic departments and University leadership to review the implications of the new rules, so faculty and administrators are equipped to support students appropriately,” Jordan said.
According to a breakdown on USC’s website, estimated tuition for a master’s in journalism was $74,010 for the 2025-26 school year. The one-year master of arts in teaching costs about $66,500, said Estevan Hernandez, with the USC Rossier School of Education.
A doctorate in dental surgery, a higher-paying field, is estimated to cost $128,547 for this coming school year, USC estimates.
A spokesperson for UCLA directed questions to the University of California Office of the President.
Stett Holbrook, a spokesperson for the office, said in an email that the “University of California remains deeply concerned about the financial impact” of the changes on students and “will continue to do all we can to ensure that cost is not a barrier for anyone who wants to pursue a higher education,” including by pursing legislative changes.
Loan uncertainties remain
The changes stem from President Trump’s “Big Beautiful Bill” passed by Congress last year.
In addition to new limits for graduate students, the student loan overhaul includes caps for parents who take out education loans for their children under a federal program.
People who were enrolled in graduate school and received a federal loan before July 1 will not face the new limits, according to the Education Department.
Much controversy emerged over what fields the government would designate as “professional” degrees for the highest loan level. The Education Department initially classified only 11 fields as professional, leaving out areas including nursing, physical therapy and education.
A federal judge blocked those limited definitions and nursing, physical therapy and other degrees were included — for now, pending a likely challenge by the Trump administration.
That uncertainty is causing consternation.
Kari Ruconich-Jones is attending a predominately online social entrepreneurship graduate program at Pepperdine University and, in August, her husband, Craig, is starting a physical therapy doctorate in Oregon, where they live. The couple, in their 50s, also have two children entering college next year.
Ruconich-Jones said she and her husband are worried his degree may not ultimately qualify for the higher loan limits. So they are coming up with contingency plans, including personal loans, savings and other options.
“We don’t want to use the equity in our house, but in the way back of my mind, that is there,” Ruconich-Jones said.