Episode summary
Why Graduate School Is About to Get Harder to Pay For
Wall Street Week
· · 11 min
Summary
Federal Grad PLUS loans, created in 2006 to let graduate students borrow up to the full cost of attendance, are ending under the One Big Beautiful Bill, and new federal caps are likely to leave many students short. The report argues that the program expanded access but also fueled higher borrowing, with annual volume rising from about $2 billion in its first year to more than $15 billion in 2024–25, or over 30% of graduate student loans.
The episode frames the change as a shift from open-ended federal lending toward a more market-based system. University leaders say the caps will make it harder to finance programs like social work, teacher training, and counseling, while private lenders see an opening to replace some of the lost volume. A private student-loan executive says many borrowers will still be financeable, though rates will depend on credit and repayment expectations.
The main tension is between discipline and access. Supporters of the caps say they could curb overborrowing and force schools to control tuition, while critics warn that private loans can be riskier and offer fewer protections if borrowers run into trouble. The piece ends with the warning that fewer dollars could mean fewer teachers, nurses, and social workers, even if graduate students are forced to shop more carefully for value.
Key takeaways
- Grad PLUS loans ended with new federal caps of $20,500 a year for most graduate programs and $50,000 for professional degrees like law and medicine.
- Graduate borrowing grew from about $2 billion in Grad PLUS's first year to more than $15 billion in 2024–25, according to the report.
- A Fordham University leader said graduate tuition is about a third of the school's revenue, showing how important this market is to university finances.
- A private lender said 50% to 75% of student situations can still be financed privately, but rates depend on credit and expected repayment.
- Critics warn private student loans may leave borrowers with fewer consumer protections and greater risk of default on rent, auto loans, or other obligations.
Notable quotes
“The program came to an end this month, with new limits placed on graduate lending from the federal government”
“-In the Grad PLUS program's first year, Americans borrowed some $2 billion. By last year, that number had ballooned to more than $15 billion”
“Grad PLUS created incentives for institutions to really lean into the graduate and professional education space”
“It's about a third of our revenue”
“-These private student loans don't have any clear consumer protections for when you can't afford your payment”
How the episode opens
David Westin: This is a story about having too much of a good thing. The U.S. college education has been the path to a brighter future for generations.
And the government has often played a key role in that future, starting with the GI Bill paying for higher education for World War II veterans and then with federal loan programs helping students get their start. But it's not just undergraduates getting those loans. The government has also provided loans for grad students, a program that exploded in recent years but is now coming to an end because of the One Big Beautiful Bill.
Bloomberg’s Scarlet Fu has the story. -Like many Americans, Marissa Bohrer relied on loans to pay for her education, a Master of Social Work degree from Washington University in St. Louis.
- Which wound up being a pretty expensive decision to make. Having the debt that I have has absolutely shaped the trajectory of the last several years of my life. -Bohrer obtained her loans through Grad PLUS, a federal program introduced in 2006 by the George W.
Bush administration that allowed students to take out unlimited and uncapped loans. Its purpose was to expand access to graduate education. But it also left young Americans like Bohrer saddled with significant debt.
The program came to an end this month, with new limits placed on graduate lending from the federal government. Almost all programs will be capped at $20,500 per year, except for those deemed professional, including law and medicine, which will top out at $50,000 per year. Under the new loan limits, Bohrer would have been over $30,000 short.
-The Grad PLUS loans have historically really filled in the gaps for people who are needing to finance more education. -In the Grad PLUS program's first year, Americans borrowed some $2 billion.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- grad plus loans
- student loan caps
- higher education funding
- private student loans
- tuition growth
Companies and tickers mentioned
- Bloomberg
Watch the episode
Watch “Why Graduate School Is About to Get Harder to Pay For” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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