If you or your clients, or their children, are considering graduate or professional school, it’s important to be aware of proposed changes to the federal Grad PLUS Loan program. These changes could significantly impact the affordability and accessibility of advanced degrees, with ripple effects across financial planning, career trajectories, and even the higher education system itself.
What Is the Grad PLUS Loan?
The Grad PLUS Loan was introduced in 2006 to allow graduate and professional students to borrow up to the full cost of attendance, minus other financial aid. It has served as a financial bridge for students pursuing degrees in fields like law, medicine, business, physical therapy, and more – often after they’ve maxed out the federal Direct Unsubsidized Loan limit ($20,500 annually, or $47,167 for certain medical/dental students).
In effect, it has enabled students to borrow virtually unlimited sums to cover tuition and living expenses for graduate school.
What’s Changing?
The federal government is considering scaling back or potentially eliminating the Grad PLUS program for graduate students. While the changes are not yet finalized, they would mark a dramatic shift from the past two decades of higher-ed financing.
This policy shift would:
- Limit how much students can borrow for graduate degrees
- Reduce access to high-cost professional programs
- Potentially drive down graduate school enrollment
- Increase selectivity and cost barriers for those considering advanced degrees
For example, a student pursuing a journalism master’s at Columbia University (with a 9.5-month cost of $120,000) could currently finance nearly all of it through federal loans. Without the PLUS program, many students may no longer be able to afford similar programs.
Why This Matters for Clients and Advisors
These changes could have wide-reaching financial consequences for students, families, and institutions:
- Students with fewer borrowing options may be unable to attend their preferred programs.
- Families may be forced to tap into savings, retirement funds, or take on private debt to fill the gap.
- Those who can afford to attend outright may benefit from a less competitive admissions landscape and higher income potential post-graduation.
- The value of certain advanced degrees could rise, as fewer graduates enter the workforce in those professions.
At the same time, many universities have used the availability of Grad PLUS funding to justify tuition increases and create new programs. A reduction in federal funding may lead schools to adjust pricing, reduce the number of programs offered, or rethink their admissions strategies.
What Clients Should Do Now
Even if the changes are not yet finalized, this is a critical time to review and prepare:
- Evaluate current and future education funding plans, especially for families with children planning to attend grad school in the next 1–5 years.
- Explore alternatives to Grad PLUS loans, such as merit-based aid, employer sponsorships, or private loan options (with careful consideration of terms).
- Revisit your broader financial plan, including education savings accounts (like 529 plans), retirement projections, and debt management strategies.
We’re Here to Help
At Callan Capital, we help families navigate major life decisions, like funding graduate education, with clarity and confidence. Whether you’re planning for your children’s future or considering an advanced degree yourself, our team can help you understand your options and build a financial strategy aligned with your long-term goals.
Source: Horsesmouth. Major Changes to Grad School Loans – 7 Things Your Clients Need to Know. 1 Apr. 2025, by Lynn O’Shaughnessy.
Disclaimer: The information in the presentation is not intended to provide and should not be relied upon for accounting, legal and tax advice or investment recommendations. Callan Capital does not provide individual tax or legal advice, nor does it provide financing services. Clients should review planned financial transactions and wealth transfer strategies with their own tax and legal advisors. Callan Capital outsources to lending and financial institutions that directly provide our clients with securities-based financing, residential and commercial financing and cash management services. For more information, please refer to our most recent Form ADV Part 2A and Form CRS which may be found at www.adviserinfo.sec.gov.
