Starting in July 2026, thousands of undergraduate students will face a new reality: tighter federal borrowing limits that will cut billions of dollars in student loan funding to colleges and universities across the country.
A new institution-level analysis from Center for Post-Secondary Education and Economics Research (PEER) The One Big Beautiful Bill Act (OBBBA) offers the most comprehensive picture yet of how the undergraduate loan limits will apply to specific schools, specific states, and specific programs. The findings suggest that the effects will not be uniform. Some institutions will barely notice the change. Others will see more than half of their graduate borrowers lose access to the federal loans they currently rely on.
Under current policy, graduate students can borrow up to $20,500 per year in unsubsidized federal loans, plus additional amounts through the Graduate Plus program up to the full cost of attendance. OBBBA eliminates the Graduate PLUS loan program entirely for new borrowers and sets an annual limit of $50,000 for professional programs (such as law and medicine) and $20,500 for all other graduate programs.
The law also introduces a lifetime borrowing limit of $200,000 for professional students and $100,000 for other graduate students.
Effects vary widely from state to state
The PEER Center analysis, built on data from the Department of Education’s Office of the Chief Economist covering academic years 2020 to 2023, reveals dramatic state-level differences.
At least 40% of graduate borrowers in each of California, Oregon, New York, Nevada and Vermont, along with Washington, DC, are currently carrying loans above the new limit. There are approximately 118,000 graduate borrowers per year in California alone, 42% of whom exceed the limit. New York, with about 77,000 annual graduate borrowers, matches the figure of 42%. Washington, DC, sits at 45%.
At the other end of the spectrum, Arizona (15%), Delaware (7%), New Hampshire (7%), and Utah (12%) have much lower shares of borrowers above the new threshold. The variation reflects differences in the types of graduate programs available in each state, the mix of public and private institutions, and regional cost-of-living factors that affect tuition and fees.
In dollar terms, annual graduate loan volume above the new limit in California is about $1.37 billion, followed by New York at $925 million and Illinois at $590 million. Even smaller states like Maine and Vermont, where the total number of borrowers is modest, will see a high percentage of their students affected.
Vocational programs face the most cuts
Programs in medicine, law, and dentistry qualify for the higher $50,000 annual limit under the OBBBA. But current borrowings in these sectors are so high that they are still among the sectors most affected by cuts in overall credit volume.
In the medical sector, 58% of borrowers have exceeded the new threshold, with annual loan volume exceeding the threshold by nearly $1 billion. Osteopathic medical programs are even more affected: 76% of borrowers are over the limit, with $599 million of loan amounts exceeding the limit. 33% of borrowers in law programs go over the limit, and that reaches 79% in dental programs.
Among non-professional graduate programs, physical therapy (63% of borrowers over the limit) and physician assistant programs (72%) predominate. Both sectors have been the subject of debate over whether they should qualify for the higher professional loan limit, and the data shows why: Combined, these two sectors have annual loan volume exceeding the limit by more than $1.1 billion.
MBA programs present a different pattern. Only 18% of students cross the border, but the sheer number of MBA enrollees means the field is in the top 10 most impacted by total dollars. Social work programs tell a similar story, with 26% of borrowers above the limit and an excess loan amount of $281 million.
Foreign medical schools: a less discussed impact
One of the less-discussed impacts of the OBBBA cap involves foreign medical schools, which are among the largest consumers of Graduate PLUS loans today. St. George’s University received $313 million, the second-highest amount of Grad PLUS disbursements of any school in the federal Direct Loan program in the 2024–25 award year. Ross University School of Medicine ranked sixth with more than $185 million.
Under the new limits, these two schools’ medical programs are the most impacted programs in the entire PEER Center analysis across all regions and institution types. St. George has 81% of borrowers over the limit and is losing approximately $169 million in annual federal loan volume. This is more than double the amount of debt at the next most affected business programs (dentistry at Midwestern University and New York University).
These foreign medical schools often have lower admissions standards than U.S. medical schools, but graduates struggle to secure residency and find jobs. The OBBA cap could effectively divert federal loan dollars away from these programs.
What this means for students and families
For prospective graduate students and their families, these new limits will force difficult calculations. A student who plans to attend a physical therapy program where 63% of current borrowers exceed the new limit will need to identify alternative funding sources, whether through private student loans, employer tuition assistance, savings, or simply not enrolling.
The challenge is especially difficult for borrowers with limited credit histories. Earlier research from the PEER Center and the Federal Reserve Bank of Philadelphia found that about 38% of graduate borrowers whose loans exceed the new limit have either a low credit score or a thin credit history. These students are unlikely to qualify for private loans without a co-signer, who they may not have access to.
Students at historically black colleges and universities face special concerns. Overall, the share of borrowers over the limit at HBCUs (30%) is similar to non-HBCU institutions (29%). But in elite schools, the numbers are much higher. 68% of Howard University graduates exceed the borrower limit. Meharry Medical College and Tuskegee University are both at 68-69%. According to federal survey data, these are the institutions where graduate and professional students are most likely to borrow in the first place.
What To Do Next
The PEER Center has released its full dataset and a Graduate Loan Limits Explorer Tool at peer-center.orgAllows students, families and institutional leaders to view specific schools and programs. With new limits for new borrowers coming into effect in just a few months, now is the time to plan.
Here are steps to consider:
- Check your specific program. Use Peer Center’s Explorer Tool To see how your school and field of study is affected. The share of borrowers above the threshold varies significantly by institution and program.
- Assess your private graduate student loan borrowing options. If your program is likely to be affected, check your credit score and explore personal loan options now. If you have limited credit history, quickly identify a potential co-signer.
- Consider program options. If you’re still deciding where to attend, compare the lending profiles of programs in your area. A school where a smaller number of students exceed the limit may leave you less exposed to the funding gap.
- Keep an eye on any law changes. Lawmakers have proposed legislation to expand the definition of professional degrees (which have a cap of $50,000), but it is still pending.
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