By Hilary Burns
Following through on a promise laid out in Project 2025, President Trump has once again taken an axe to a pillar of the teetering business model propping up the nation’s higher education system, this time with the help of his allies in Congress. Come July 1, there will be limits on how much students can borrow from the government for graduate school. And Graduate Plus Loans, a program that was created 20 years ago for students who had exhausted other federal lending options, will cease to exist.
The looming changes are causing serious angst on the left. Senator Elizabeth Warren says the plans amount to a “massive giveaway to private student loan lenders,” because she expects more students to now turn to those companies to finance graduate school. Warren and many people in higher education worry that working-class students could now be priced out of medical and law school altogether.
But what if there’s a chance that the changes to the loan programs do a lot of good in the long run?
The unfortunate reality is that many graduate school programs do not pay off financially for students. And limits to federal borrowing may give graduate schools little choice but to make programs more affordable.
Researchers estimate that the costs of attending graduate school tripled between 2000 and 2020. Graduate borrowing accounts for about half the $1.7 trillion of student loan debt, despite involving only about a fifth of student borrowers. Grad Plus loans, established in 2005, effectively removed limits on graduate school loans so students could borrow the entire cost of pursuing advanced degrees, including living expenses. But these loans, with interest rates now at nearly 9 percent, have exacerbated the student debt crisis.
I spoke with half a dozen professionals with advanced degrees in various fields, as well as current graduate students, and while the details of their experiences vary, many of them now wish their younger selves had had a better grasp of the expected salary outcomes of their grad programs before they took on hundreds of thousands of dollars in debt to fund their educations.
This group did not include people with expensive master’s degrees in the humanities. All had degrees that are widely assumed to have a good payoff. For example, a lawyer in San Francisco said her student debt has delayed her purchase of a home. A lawyer in Maryland said she has opted not to have kids because of her debt. (Most of the people I spoke with did not want to be named because of the stigma associated with student debt.) Several people told me their debt loads and the frequent changes to federal lending programs and rules in recent years have caused much stress and anxiety.
Students have long been sold the narrative that graduate degrees will lead to higher earnings, but the payoff varies tremendously from field to field, says Preston Cooper, an economist and fellow with the right-leaning American Enterprise Institute. Cooper analyzed Census Bureau and federal College Scorecard data and found that about 40 percent of US graduate programs provide no net financial value.
Ideally, the changes coming on July 1 for graduate student borrowing, passed by the GOP last summer in the One Big Beautiful Bill Act, will spark a long overdue reckoning over graduate school costs and outcomes as well as discussion about whether some fields require more credentials than are truly necessary.
“It’s going to cause massive problems, but is it a way to make some positive change toward better outcomes for the students?” asks Jeff Strohl, a professor and director of the Georgetown University Center on Education and the Workforce.
Already there are signs that schools may be forced to reduce the cost of graduate programs. So far, Santa Clara University School of Law, the Lewis & Clark Graduate School of Education and Counseling, and Johns Hopkins Carey Business School have announced significant tuition reductions or new scholarships starting in the fall semester.
Lewis & Clark reported on its website that its “historic investment in need-based scholarships” for graduate students is in “direct response to the federal government’s divestment in higher education and the elimination of access to the Grad PLUS loan.”
Other institutions, including the University of Kansas School of Law and Washington University School of Law, have launched in-house loan programs so students don’t have to turn to private lenders.
More employers could also step up to help employees cover the cost of grad school. Tess Michaels, the chief executive of the Boston-based financial technology company Clasp, says she is seeing an uptick in interest from health care employers across the country wanting to use her platform to connect with future employees.
Clasp arranges loans for students in school for nursing, physical therapy, optometry, and other medical careers, and then matches borrowers with employers, which agree to hire the student and pay back a portion of the loans in exchange for a commitment of a few years of work. It’s similar to the ROTC model for the military. Unlike most private loans, Clasp’s loans do not require a cosigner. Michaels says health care employers essentially can fund these loans by reallocating money they are already spending on perks such as signing bonuses.
“It has caught on like wildfire,” Michaels says.
When Grad Plus loans were established under the Deficit Reduction Act of 2005, the hope was that the increase in borrowing limits would broaden access to expensive graduate school programs, especially for low-income and first-generation students. (Researchers have found that increased borrowing opportunities at the undergraduate level did just that.)
But academic researchers studying Grad Plus loans in Texas found that the program did not increase access, according to a paper published in 2023 by the National Bureau of Economic Research. The researchers found evidence that Grad Plus loans did, however, have the unintended effect of raising sticker prices of many graduate school programs once students who were previously “constrained by federal loan limits” could borrow more through Grad Plus.
The researchers found that “sticker prices went up approximately dollar for dollar with increases in federal loans.”
Graduate programs, for many universities, are a critical revenue stream — one that often subsidizes the undergraduate operations. So some higher education watchers are skeptical that many universities will be able to afford to lower their prices.
On the other hand, how can they afford not to lower prices? Consider, for example, the University of Southern California, where a dental student I spoke with is expecting to borrow nearly $800,000 for her degree and four years’ worth of living expenses. She estimates that 40 percent of her class are relying on family contributions to pay for dental school while the rest of the students are taking on immense debt.
The new lending caps put an annual limit of $50,000 on federal borrowing and a cumulative limit of $200,000 for professional programs like dentistry, which would make attending the USC dental program difficult, if not impossible, for the majority of would-be students. (Current students finishing within the next three years are grandfathered into their Graduate Plus loans, which allows them to borrow the entire cost of the program.) It seems unlikely that USC will be willing to risk losing students to lower-cost programs.
So, why won’t private lenders fill the gap so the status quo can remain?
Private loans are harder for students to obtain and pay off because they require a more robust credit review, usually require a cosigner, and generally lack the protections and repayment options federal loans offer, such as relief for public service. Jovita Bell, a recent graduate of Brandeis University from Atlanta, plans to attend dental school at the University of Connecticut in the fall, but the elimination of Graduate Plus loans has her scrambling to figure out how to finance the roughly $400,000 program. She has applied to myriad scholarships, hopes to qualify for in-state tuition down the road, and is trying to secure a private loan, though she has so far been rejected several times.
Bell is determined to make it work. But other students tell me they are now considering skipping graduate school because of the changes in federal regulations.
Universities do not want these students to walk away. When it’s possible for colleges and universities to discount tuition for certain students, they tend to favor that step over losing them entirely. Enrollment declines are something few schools can afford.
So if more schools follow the lead of Santa Clara University and Johns Hopkins this summer, and more employers step up to pitch in, it just may be possible that Trump and his allies will end up forcing improvements on a system that generally changes slowly — and reluctantly.
Hilary Burns is a reporter covering higher education for the Globe's Opinion section.
This article originally appeared on BostonGlobe.com on June 17, 2026.