The federal Graduate PLUS Loan program, which historically allowed graduate and professional students to borrow up to the full cost of attendance, was eliminated for new borrowers on July 1, 2026, under the One Big Beautiful Bill Act (OBBBA) . This means that for students starting graduate programs in or after the 2026-2027 academic year, Graduate PLUS Loans are no longer available, and federal borrowing is now capped at $20,500 annually for most graduate students .
For current students who received a federal loan before July 1, 2026, a limited legacy provision may allow continued borrowing through the program if they remain continuously enrolled in the same program . This guide explains how the new rules affect borrowers, what options remain available, and how to plan for graduate school financing in 2027.
What Is a Graduate PLUS Loan?
Graduate PLUS Loans were federal student loans available to graduate and professional students to help cover educational expenses not met by other financial aid. Borrowers could obtain loans up to the full cost of attendance, minus any other financial assistance received . These loans featured a fixed interest rate and required a credit check to ensure the borrower did not have an adverse credit history .
Historical Context for 2027
A significant shift occurred in July 2026 when Congress eliminated the Graduate PLUS program for new borrowers . This decision was part of the One Big Beautiful Bill Act, which overhauled federal student loan regulations . For students beginning a new graduate or professional program on or after July 1, 2026, Graduate PLUS Loans are no longer an option . The federal borrowing limit for most graduate students is now capped at $20,500 per year through Direct Unsubsidized Loans, with a $100,000 aggregate limit .
Key Features of Graduate PLUS Loans (For Legacy Borrowers)
For the limited number of borrowers who qualify under the legacy provision, the key features remain similar to what they were prior to 2026.
Interest Rates
For loans first disbursed between July 1, 2026, and June 30, 2027, the fixed interest rate for Graduate PLUS Loans is 9.07% .
Origination Fees
Graduate PLUS Loans have an origination fee of 4.228%, which is deducted from each disbursement . For example, a borrower who takes out $10,000 would receive $9,577 in their student account .
Eligibility Requirements
To qualify for the legacy provision, borrowers must meet specific criteria:
- Enrollment: Enrolled at least half-time in a graduate or professional program .
- Credit Check: Must not have an adverse credit history, which includes bankruptcy, foreclosure, tax liens, or debts 90 days or more delinquent within the last two years .
- Legacy Status: For the 2026-2027 academic year, only students who received a Direct Loan before July 1, 2026, and remain continuously enrolled in the same program may be eligible .
Repayment Options
Graduate PLUS Loans generally enter repayment 60 days after the final disbursement, though borrowers are automatically granted an in-school deferment while enrolled at least half-time . For borrowers under the legacy provision, the new Repayment Assistance Plan (RAP) is an income-driven option that may be available .
Graduate PLUS Loans vs. Other Student Loan Options
With the elimination of the Graduate PLUS Loan, graduate students must rely on a combination of federal and private loans to cover the cost of attendance.
Federal Direct Unsubsidized Loans
Direct Unsubsidized Loans remain available to graduate students and do not require a credit check . Interest accrues during school, and borrowers are responsible for all interest . Starting July 1, 2026, new graduate borrowers are limited to a maximum of $20,500 per year and $100,000 in total for graduate study .
Private Graduate Student Loans
Private loans from banks and credit unions can help fill the gap left by the elimination of Graduate PLUS Loans . These loans are credit-based and may require a cosigner . Borrowers with strong credit may secure competitive rates, but private loans lack the federal protections found in government-backed loans .
Federal vs. Private Loans Comparison
Eligibility for Legacy Borrowers
Students who received a federal Direct Loan before July 1, 2026, may be eligible to continue borrowing under previous rules if they meet certain conditions .
Who Qualifies for the Legacy Provision
To qualify, a student must have been enrolled in their program by June 30, 2026, and received a federal Direct Loan for that specific program before July 1, 2026 . Additionally, they must remain continuously enrolled in the same program at the same institution without exceeding the program’s expected time to credential .
Impact on Returning Students
Students who change programs, transfer institutions, or fail to maintain continuous enrollment after July 1, 2026, will lose their legacy status and become subject to the new loan limits . The legacy provision is available only for the shorter of three academic years or the remaining published program length .
How to Apply for a Graduate PLUS Loan (Legacy Borrowers)
Eligible students should follow a specific application process to secure a Graduate PLUS Loan.
1. Complete the FAFSA
Students must submit the Free Application for Federal Student Aid (FAFSA) to be considered for any federal financial aid .
2. Complete the PLUS Application
After submitting the FAFSA, students apply for a PLUS Loan directly through StudentAid.gov, which initiates a credit check . The credit check is valid for 180 days, so it is recommended to apply early.
3. Address Adverse Credit
If credit is denied, students may obtain an endorser (a cosigner who passes the credit check) or appeal the credit decision with documentation of extenuating circumstances .
4. Complete Master Promissory Note and Counseling
First-time borrowers must complete a PLUS Master Promissory Note (MPN) and Entrance Counseling .
Frequently Asked Questions
Are Graduate PLUS Loans Still Available in 2027?
No, for new borrowers. The program was eliminated for new borrowers on July 1, 2026. Only students who qualify under the limited legacy provision (those who received a Direct Loan before July 1, 2026, and remain in the same program) can continue to access them .
What Are the Alternatives to Graduate PLUS Loans?
Graduate students now primarily rely on federal Direct Unsubsidized Loans, which are capped at $20,500 per year, and private student loans from banks or credit unions . Some students may also seek scholarships, grants, or employer tuition assistance.
What Is the Interest Rate for Graduate PLUS Loans for 2026-2027?
For loans disbursed between July 1, 2026, and June 30, 2027, the fixed interest rate is 9.07% .
Can I Get a Graduate PLUS Loan with Bad Credit?
Typically, no. Graduate PLUS Loans require a credit check and a history without adverse credit, such as bankruptcy or 90-day delinquencies . However, a student may be able to obtain an endorser (cosigner) or appeal the credit decision based on extenuating circumstances .
What Happens to Current Graduate Students Under the New Rules?
Current students who received a Direct Loan before July 1, 2026, may continue borrowing under the legacy provision for up to three more academic years, provided they remain enrolled in the same program .
How Does the Graduate PLUS Loan Compare to a Private Graduate Loan?
Graduate PLUS Loans offer fixed rates and federal protections, while private loans can have variable rates and lack federal benefits like income-driven repayment or forgiveness . However, private loans are available to new borrowers who cannot access PLUS Loans .
What Is the New Lifetime Borrowing Cap for Federal Loans?
Starting July 1, 2026, a total aggregate lifetime limit of $257,500 applies to all federal student loans combined for most borrowers (excluding Parent PLUS Loans) .
Conclusion
Graduate PLUS Loans are no longer available for students starting graduate programs after July 1, 2026. The elimination of this program, along with new caps on federal loans, represents a major shift in graduate school financing .
Current students who qualify for the legacy provision can still use the program for a limited time, but new students will need to rely on federal Direct Unsubsidized Loans and private lenders to cover their costs . As the federal loan landscape evolves, it is essential to plan ahead and explore all available funding options.