No. Graduate and professional students are not eligible for subsidized loans. Congress ended that eligibility in the Budget Control Act of 2011, and since July 1, 2012, no one enrolled in a graduate or professional program has been able to receive a Direct Subsidized Loan.1Office of the Law Revision Counsel. 20 USC 1087e – Terms and Conditions of Loans The subsidy — the federal government paying your interest while you’re in school — now applies only to undergraduates with financial need.
The practical consequence matters. Every federal loan a graduate student takes out starts accruing interest the day it’s disbursed. There is no in-school interest benefit, no half-time enrollment relief on interest, and no grace period that pauses interest growth. If you don’t pay the interest while enrolled, it capitalizes when you enter repayment and gets added to your principal, so you end up paying interest on interest.
What Federal Loans Graduate Students Can Get
Two federal borrowing options remain, both run through the William D. Ford Federal Direct Loan Program.
Direct Unsubsidized Loans
This is the primary federal option for graduate students. No credit check is required. For the 2025–2026 academic year, the annual limit is $20,500, and the aggregate limit across all federal borrowing (including undergraduate loans) is $138,500.2Federal Student Aid. Annual and Aggregate Loan Limits The fixed interest rate for loans first disbursed between July 1, 2025, and June 30, 2026, is 7.94%, with a 1.057% origination fee deducted from each disbursement.3Federal Student Aid. Interest Rates for Direct Loans First Disbursed Between July 1, 2025 and June 30, 2026 On a full $20,500 loan, the fee reduces your actual disbursement by about $217.
Students in certain health professions doctoral programs can borrow additional unsubsidized amounts on top of the $20,500. A nine-month program in allopathic medicine, osteopathic medicine, dentistry, veterinary medicine, optometry, podiatric medicine, or naturopathic medicine qualifies for up to $20,000 extra per year; pharmacy, chiropractic, doctoral clinical psychology, public health, and health administration programs qualify for up to $12,500 extra. The aggregate cap for eligible health professions students is $224,000.2Federal Student Aid. Annual and Aggregate Loan Limits
Grad PLUS Loans (Through June 30, 2026)
Grad PLUS Loans let a graduate student borrow up to the full cost of attendance minus any other aid received, which has traditionally let federal borrowing cover the full price of even expensive programs. The rate is higher: 8.94% fixed for loans first disbursed between July 1, 2025, and June 30, 2026, with a 4.228% origination fee for loans disbursed between October 1, 2025, and September 30, 2026.4Federal Student Aid. Direct PLUS Loans for Graduate or Professional Students On a $30,000 PLUS loan, that fee takes roughly $1,268 off the top.
A credit check applies, but it’s narrower than a private lender’s. The Department of Education doesn’t look at your credit score or debt-to-income ratio; it checks only for “adverse credit history,” defined as specific negative events in the past five years: bankruptcy discharge, foreclosure, repossession, tax liens, wage garnishment, or accounts totaling $2,085 or more that are 90 or more days delinquent, charged off, or in collections.5Federal Student Aid. PLUS Loans: What to Do if You’re Denied Based on Adverse Credit History If you’re denied, you can appeal with documentation (identity theft, reporting errors, extenuating circumstances) and complete PLUS Credit Counseling, or secure an endorser who agrees to repay if you don’t.
Grad PLUS Is Ending for New Borrowers in July 2026
This is the single most important change graduate borrowers face right now. Federal legislation eliminates the Grad PLUS program for new borrowers starting July 1, 2026. The Department of Education has stated the law “eliminates the Grad PLUS program, which allowed unlimited borrowing and contributed to rising graduate tuition,” and replaces unlimited borrowing with hard caps.6U.S. Department of Education. U.S. Department of Education Issues Proposed Rule to Make Higher Education More Affordable and Simplify Student Loan Repaymentp>
From July 1, 2026, new graduate borrowers will have access only to Direct Unsubsidized Loans, subject to these limits:7U.S. Department of Education. U.S. Department of Education Concludes Negotiated Rulemaking Session
- Graduate programs: up to $20,500 per year, with a $100,000 aggregate limit for the degree.
- Professional programs: up to $50,000 per year, with a $200,000 aggregate limit for the degree.
Consider what that gap looks like in practice. A student in a two-year master’s program costing $60,000 per year would max out at $41,000 in federal loans and face $79,000 that federal borrowing can no longer cover. Under current rules, Grad PLUS would have filled the entire gap.
Existing borrowers who already have Grad PLUS Loans may be able to continue borrowing under the old rules for up to three years to finish their current programs, and prior loans reportedly won’t count toward the new aggregate limits. The Department’s rulemaking is still ongoing, so some details around grandfathering and the definition of “professional program” may shift before final rules are published. How the higher health professions limits interact with the new caps will also depend on the final rules.
Repayment and Forgiveness You Should Know Before Borrowing
Because graduate borrowers carry larger balances and no in-school interest subsidy, the repayment plan you qualify for matters as much as the loan itself. Federal loans offer income-driven repayment, deferment and forbearance, and loan forgiveness; private loans generally do not.8Federal Student Aid. Federal Versus Private Loans
Income-Driven Repayment Is Changing
The SAVE plan has been shut down and is no longer enrolling new participants. Borrowers already on SAVE need to switch to another plan by July 1, 2028. For new federal loans disbursed on or after July 1, 2026, the only income-driven option will be the new Repayment Assistance Plan (RAP). Under RAP, monthly payments are set as a percentage of adjusted gross income with a $10 minimum. If your payment is less than the monthly interest accruing, the unpaid interest is not charged, so your balance doesn’t grow while you’re in the plan. Remaining balances are forgiven after 30 years. Income-Based Repayment (IBR) remains available for loans disbursed before July 2026.
Public Service Loan Forgiveness
PSLF is one of the most valuable programs available to graduate borrowers. After 120 qualifying monthly payments while employed full-time by a government agency or 501(c)(3) nonprofit, your remaining Direct Loan balance is forgiven. Payments don’t have to be consecutive, but you must be working for a qualifying employer when each payment is made and when you apply for forgiveness.9Federal Student Aid. Public Service Loan Forgiveness FAQ Payments of $0 under an income-driven plan count toward the 120 as long as the employment requirement is met.
Both Direct Unsubsidized and Grad PLUS Loans qualify for PSLF when repaid under an income-driven plan or the standard 10-year plan.9Federal Student Aid. Public Service Loan Forgiveness FAQ For someone heading into public interest law, social work, or government, PSLF can erase six figures of graduate debt — which makes keeping your borrowing inside the federal system worthwhile even when private rates look lower.
When Federal Loans Fall Short
Private student loans from banks and credit unions can fill the gap when federal limits don’t cover your costs, and that gap is going to be larger for students starting after July 2026. Private loans typically require a credit check that looks at your score and income, often need a cosigner, and may carry variable rates.
The bigger issue is what private loans don’t offer: no income-driven repayment, no deferment during economic hardship, no PSLF, and no path into a federal Direct Consolidation Loan.8Federal Student Aid. Federal Versus Private Loans If PSLF or flexible repayment is anywhere in your plans, exhaust your federal borrowing first.