Overview
- The Education Department’s final rules, published this month, take effect in July and end Grad PLUS for new borrowers while replacing the current menu of repayment plans with two options called Repayment Assistance Plan and Tiered Standard.
- New caps limit borrowing to $20,500 a year for most graduate students with a $100,000 lifetime cap, to $50,000 a year for designated professional programs such as medicine and law with a $200,000 cap, and to $20,000 a year for Parent PLUS with a $65,000 cap per dependent.
- Students already using Grad PLUS are generally grandfathered, with access to that program allowed until they finish their program or for up to three years, which shields some current borrowers from the new limits.
- Advocates say many borrowers will face higher monthly costs and larger gaps in funding, with a Boston startup, Clasp, estimating a $6.85 billion nationwide shortfall that could steer students toward private loans that lack federal protections.
- Colleges and states are rolling out stopgaps such as private-lender partnerships, zero- or low-interest school and state loans, and endowment-backed options, while startups link graduates to employers that agree to pay down debt, even as experts warn of rocky servicing and enrollment transitions and note Treasury will start collecting on defaulted loans.