Based on reporting by AP

New federal limits on graduate and parent borrowing that took effect this fall have led many students to private lenders to cover remaining program costs, the Associated Press reported Friday¹.

AP said legislation signed by President Donald Trump set a $200,000 federal cap for programs designated as professional degrees and $100,000 for other graduate programs, replacing earlier rules that let graduate students borrow up to the full cost of attendance¹. The wire also cited a lifetime borrowing cap of $257,500 for new borrowers and new parent-loan limits¹.

Private originations have risen, AP said, citing SoFi's report of $2.9 billion in student-loan originations in the third quarter, nearly double a year earlier, and Sallie Mae's report that graduate loans rose 119 percent year over year¹. Jordan Matsudaira of American University's Postsecondary Education & Economics Research Center estimated that once the rules are fully phased in, more than 500,000 borrowers would need about $20,000 a year from sources other than the federal program, with the largest gaps in medicine, law, dentistry and high-cost states¹.

The Trump administration has said the caps will curb what it calls excessive borrowing and pressure schools on price; AP cited the American Enterprise Institute as saying at least 40 schools have cut costs in some programs¹. Critics told AP that many colleges cannot cut tuition and that poorer students face new barriers¹. AP described campus responses including more private borrowing at South Carolina Student Loan, a University of Kansas law school loan program, and extra scholarship aid at Lewis & Clark College¹. A federal judge blocked part of a rule that would have held nursing, physical therapy and some other fields to lower limits, AP said, leaving those programs eligible for higher amounts for now¹.

Sources

1. APNew limits on federal student loans are steering many borrowers toward private lenders2:00 PM

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