This week the Department of Education finalized regulations implementing the student loan overhaul embedded in the Working Families Tax Cuts Act, signed into law last July. Beginning July 1, 2026, graduate students face an annual cap of $20,500 and a lifetime cap of $100,000 in federal loans, while students in 11 designated professional doctorate programs may borrow up to $50,000 annually and $200,000 in total. The graduate PLUS loan program, which previously allowed borrowing up to the full cost of attendance, is eliminated entirely.
The Private-Loan Gap Now Widens
The gap between what federal loans will cover and what graduate programs actually cost is about to grow measurably. For students in medicine, law, or dentistry whose programs routinely exceed the new federal caps, private student lending becomes a structural necessity rather than a last resort. Under Secretary Nicholas Kent framed the rule as a cost-containment measure directed at institutions, but the final regulations acknowledge that students who exceed federal limits will need to turn to private lenders, who carry variable rates, credit requirements, and no access to Public Service Loan Forgiveness.
A Concrete Opening for CU Student Lending
For credit union leaders, the elimination of grad PLUS and the new aggregate lifetime limit of $257,500 (inclusive of undergraduate debt) represent a direct opening in the private student loan market. Graduate borrowers who exhaust federal eligibility are precisely the kind of member credit unions are positioned to serve: typically employed, income-oriented, and looking for a trustworthy lender without the variable-rate exposure of a bank product. CUs that can offer fixed-rate private student loans with clear terms have a credible pitch to a borrower segment that is newly underserved by the federal system and unlikely to disappear.
What we're watching: Whether enrollment shifts in high-cost professional programs, particularly those outside the 11 qualifying doctorate categories, signal sustained demand for private student loan products starting in the 2026-27 academic year.