Graduate School Funding Is Changing. Here’s How to Plan for Your Master’s Degree at Pace.

Starting July 1, 2026, big changes are coming to federal student loans, including the elimination of the Graduate PLUS Loan Program, which many graduate students used to cover the costs of their degree. At Pace, we are committed to helping graduate students understand these changes and explore the funding options available, and so we offer this overview of the changes and suggestions for how you can secure funding.

Understanding Federal Student Loans for Graduate Students

Whether you’re new to graduate school financing or not, federal loans can feel like a maze of acronyms and fine print. Here’s an overview of what funding is available to graduate students, so you have the context to understand what’s changing and how it affects you.

Graduate students have traditionally had access to two main types of federal loans:

• Direct Unsubsidized loans are available to both undergraduate and graduate students. Interest on these loans starts to accrue immediately, but they come with relatively straightforward terms and borrowing limits.
• Federal Direct Graduate PLUS (Grad PLUS) loans previously allowed graduate students to borrow up to the full cost of attendance — well beyond the caps on Direct Unsubsidized Loans — and were broadly accessible to most applicants who passed a basic credit check.

For many graduate students, Grad PLUS Loans were a critical piece of the funding puzzle. Their elimination is a major change. What we want you to know is this: graduate students should review alternative financing options, and Pace is available to assist in that process.

Financial Aid Changes in 2026–2027 for Graduate Students

On July 4, 2025, H.R.1 — more commonly known as the “One Big Beautiful Bill Act” (OBBBA) — was signed into law. This new legislation brought many changes to the U.S. tax code and federal spending, including significant changes to higher education policy. For graduate students, the provisions below have a direct impact on how you’ll fund your degree:

• The elimination of the Grad PLUS Loan Program
• Updated annual and lifetime limits on federal student loans
• Fewer repayment options for new borrowers

Let’s take a closer look at each one.

Elimination of the Federal Direct Graduate PLUS Loan Program

The biggest change that directly affects graduate students is that, starting July 1, 2026, graduate students will no longer be able to take out Grad PLUS loans.

As outlined above, Grad PLUS loans allowed graduate students to borrow up to their full cost of attendance. But the borrowing limits weren’t the only thing that made them appealing. Unlike private loans, Grad PLUS loans required no cosigner; only a basic credit check; and came with federal protections, including eligibility for Public Service Loan Forgiveness (PSLF), a program that forgives remaining federal loan balances for borrowers who work in qualifying public service roles after 10 years of payments.

Effective July 1, 2026, Grad PLUS loans will no longer be available to new borrowers. Graduate students will instead be limited to Graduate and Professional Direct Unsubsidized loans, which carry lower borrowing caps and do not offer the same federal protections — changes we’ll explain in the next section.

New Graduate Student Loan Limits

The second biggest change that directly impacts graduate students is how the limits for Federal Direct Unsubsidized Loans have been restructured. These limits aren’t new — Direct Unsubsidized loans have always had borrowing caps — but with Grad PLUS loans phased out, they now represent the ceiling on federal borrowing rather than a baseline.

Graduate programs designated as “professional degrees” may borrow up to $50,000 per year, with a lifetime limit of $200,000 in Direct Unsubsidized Loans. As defined by the OBBBA, a professional program is one that leads to a professional degree, typically at the doctoral level, which prepares students for licensed practice in a regulated profession.

The programs currently designated as “professional” are:

• Chiropractic (DC)
• Clinical Psychology (Psy.D., Phd)
• Dentistry (DDS, DMD)
• Law (JD, LLB)
• Medicine (MD)
• Optometry (OD)
• Osteopathic Medicine (DO)
• Pharmacy (PharmD)
• Podiatry (DPM, PodD)
• Theology (MDiv, MHL)
• Veterinary Medicine (DVM)

All other programs are considered “graduate degree” programs, with a lower cap of $20,500 per year and a lifetime limit of $100,000 in Direct Unsubsidized loans. Notably, the following programs have been reclassified from “professional” to “graduate” under the new legislation, meaning students in these fields are only eligible for aid at the lower limit:

• Accounting (MAccy, PhD)
• Architecture (MA/MFA)
• Audiology (AuD, PhD)
• Education (MA, MS, MEd., MAT, EdS., PhD, EdD)
• Nursing (MSN, DPN, PhD)
• Occupational Therapy (OTD)
• Physician Assistant (MSHS, MSHS/MPH)
• Physical Therapy (DPT)
• Social Work (MSW, DSW)

In all cases, these borrowing limits are not guaranteed to cover the full cost of a program, and graduate students may need to supplement with additional loans or other sources of financial aid. We’re committed to helping you understand and explore every option available to you, so we’ll cover these supplemental sources in more detail later in this guide.

New Loan Repayment Options

The OBBBA significantly reduces the number of federal loan repayment options available to borrowers. As of July 1, 2028, these income-driven repayment (IDR) plans will no longer be available:

• Pay As You Earn (PAYE), which caps payments at 10% of discretionary income and offers forgiveness after 20 years
• Income-Contingent Repayment (ICR), which calculates payments at up to 20% of discretionary income and offers forgiveness after 25 years

The Saving on a Valuable Education (SAVE) plan, which tied payments to income and offered forgiveness after 20–25 years, was terminated early following a 2025 court ruling. As such, it is no longer accepting enrollments.

If you’re currently on one of these plans, the repayment options available to you after July 1, 2028 will depend on when you first borrowed. Borrowers who took out PAYE, ICR, or SAVE loans before July 1, 2014 will need to move to one of the following:

• The Original Income-Based Repayment (Original IBR), a type of IDR plan that caps payments at 15% of discretionary income and offers forgiveness after 25 years
• The Repayment Assistance Plan (RAP), a new IDR plan that sets monthly payments on a sliding scale of 1%–10% of your adjusted gross income, cancels any unpaid interest each month so your balance can’t grow, and contributes $50 per month toward your principal if your payment doesn’t cover it. Loans are forgiven after 30 years of payments, and RAP qualifies for PSLF.
• The Standard Repayment Plan, a fixed-payment plan with a term length based on the total amount borrowed.

Borrowers who took out PAYE, ICR, or SAVE loans between July 1, 2014 and July 1, 2026 will need to move to the RAP, the Standard Repayment Plan, or the 2014 IBR, which is an updated version of the Original IBR that caps payments at 10% of discretionary income and offers forgiveness after 20 years.

The options for borrowers who take out new loans on or after July 1, 2026 are narrower still. Neither the Original nor the 2014 IBR will be available to new borrowers, leaving only two paths forward: RAP and the Standard Repayment Plan. For many graduate students, this means less flexibility in terms of how you manage repayment after graduation, and potentially a longer road to loan forgiveness.

Note that if you’re employed by a government or not-for-profit organization, you might be eligible for the Public Service Loan Forgiveness (PSLF) Program. The PSLF Program forgives the remaining balance on your Direct Loans after 120 qualifying monthly payments have been paid and you’ve been working full-time for an eligible employer.

Making sense of these changes can feel overwhelming, and it’s understandable to worry about whether you’ll be able to afford a graduate degree in light of them. Just know that Pace’s representatives are here to help you find your footing; we encourage you to reach out if you have any questions or need support.

Who Is Affected by the Changes to Grad School Funding

After July 1, 2026, these rules apply to all graduate students who start a new graduate program — either a recognized professional program or a graduate program. You’ll still be able to apply for Direct Unsubsidized loans, but you’ll need to take on additional private loans or secure other means of financial aid to make up for any gaps in funding to cover the full cost of attendance.

Who Is Not Affected

Financial aid for the 2025–2026 academic year is not changing. Any graduate student who borrowed a Federal Direct Loan — either an Unsubsidized or a Grad PLUS loan — for their current program before July 1, 2026 is grandfathered in under current rules. That means you can continue to borrow Grad PLUS loans up to your cost of attendance (minus all other aid) for up to the remaining length of your program or until you finish your program, whichever comes first.

Example: Many graduate programs at Pace are classified as 2 year programs, which is considered 2 years at full-time enrollment. If you have been enrolled for one year already, no matter how many credits you have taken, you will only be grandfathered for one more year.

To maintain this eligibility, Pace graduate students must remain continuously enrolled in Fall and Spring Semesters at a minimum of six credits per semester. Any leave of absence will end this eligibility.

For additional details on the OBBBA impacts on student loans, including changes to Parent PLUS Loans, FAFSA applications, and repayment plans, see Pace University’s page on The One Big Beautiful Bill Act and Financial Aid.
 

Timeline for Graduate PLUS Loan Phase-Out

What Are the Remaining Federal Loan Options for Graduate Students?

Despite the end of the Grad PLUS program, there are still federal loans and federal student aid options available for new graduate students. It’s important that you understand all the options still available to you; here’s a breakdown:

• Federal Direct Unsubsidized Loans
  Federal student loans are available to graduate students regardless of financial need. These Unsubsidized loans have fixed interest rates and annual and lifetime borrowing limits based on the following criteria:
  • Students in designated professional degree programs can borrow up to $50,000 per year, with a lifetime aggregate limit of $200,000 for professional-degree direct unsubsidized loans
  • Students in all other graduate programs can borrow up to $20,500 per academic year, with a lifetime federal aggregate limit of $100,000 for graduate-level direct unsubsidized loans.
• Federal Grants and Fellowships
  Aside from federal loans, there are competitive federal grants offered by federal agencies such as the National Institutes of Health (NIH) and the National Science Foundation (NSF). These agencies offer research or training grants for graduate study in specific fields. Grants do not have to be paid back, but they are limited in scope for graduate students and usually require separate applications beyond the FAFSA. If you think you may qualify, explore these opportunities early, as grant application timelines can vary widely.
• Federal Work-Study Programs
  Federal Work-Study awards are separate from loan programs and do not need to be repaid. Income from Federal Work Study does not pay towards your tuition bill, but it is instead earned via a bi-weekly paycheck. Federal Work-Study programs are available at participating institutions, such as Pace University. If you’re unsure whether you qualify, our financial aid team can assist you.

Additional Funding Options for Graduate Students

With the changes to federal funding, most graduate student borrowers will now need to rely on a mix of funding sources, including private loans and other sources of financial aid. Here are some resources to help get you started:

Private Lenders

Private Education Loans are credit-based loans borrowed by the student. Pace University does not recommend any particular private lenders. We will accept and certify a loan from any lender the student chooses. You may utilize Pace University's ELM Select page to review a historical list of lender options.

Third-Party Scholarships

Organizations, such as private corporations, non-profit organizations, and local community organizations, offer scholarship opportunities to students. Pace’s Third Party Scholarship Resources page lists several ways that students can find third-party scholarship opportunities.

The Financial Aid Office also recommends that students research local scholarship opportunities through community groups, high school clubs, religious institutions, parent and student employers, and professional associations such as the:

• American Psychological Association (APA)
• National Black MBA Association (NBMBAA)
• Congressional Hispanic Caucus Institute (CHCI)
• American Institute of Certified Public Accountants (AICPA)

Scholarships and Funding Opportunities at Pace University

Graduate Assistantships are tuition reimbursements and stipends available to students who have shown academic accomplishment, skills, and related experience. Full, part-time, and quarter-time assistantships (in research and/or administrative positions) are awarded by the academic department through which the student is admitted. Students will need to file the Graduate Assistantship application, available in the application for admission, to be considered for an Assistantship. Students cannot have a graduate scholarship and a graduate assistantship.

There are several prestigious fellowships and scholarships available to nominated or recommended Pace students. See the full list of awards and their requirements on our Graduate Scholarship and Awards page.

Guidance on Planning and Budgeting for Graduate School Costs

Pace University’s Solution Centers, located on the New York City, Pleasantville, and White Plains (Law) campuses, provide students with a centralized place to go for all questions about financial aid. You can also find links to additional resources on our Financial Aid Resources page.

New York State funds the Education Debt Consumer Assistance Program (EDCAP), a program of the Community Service Society of New York (CSS), to help current borrowers with the student loan repayment system and assist future students in applying for financial aid. If you’re looking for additional assistance in navigating graduate loans, EDCAP offers free loan counseling for New Yorkers. Between Pace’s own resources and programs such as EDCAP, there’s support available to you every step of the way as you navigate graduate degree financing changes, so don’t hesitate to use it.

FAQ

What is the OBBBA?
The One Big Beautiful Bill Act (OBBBA) is a budget reconciliation bill that was passed on July 4, 2025. This Act has now been rebranded as the Working Family’s Tax Plan. It brought many different changes to the U.S. tax code, including simplifying loan programs, capping borrowing, and reducing long-term federal lending exposure. The OBBA heavily reshaped student financial aid, including major changes to graduate borrowing and shifting more responsibility from the federal government to schools, employers, and private funding sources.

What is an unsubsidized federal loan?
A Direct Unsubsidized Loan is a federal student loan available to graduate students regardless of financial need. Interest begins accruing as soon as the loan is disbursed, and the student is responsible for paying all interest, during school and after. These loans have fixed interest rates and annual and lifetime borrowing limits.

What’s changing with graduate student loans?
The biggest change to graduate student loans with the OBBBA is that Graduate PLUS loans will end for new borrowers after July 1, 2026. Instead, graduate students will rely primarily on Direct Unsubsidized Loans, which have strict annual and lifetime caps. This means new borrowers may not be able to cover the full cost of attendance with federal loans alone.

Are other student loan rules changing?
Yes, other student loan rules are changing. The OBBBA introduces new borrowing limits, simplifies repayment into fewer plans, and replaces existing income-driven options with a new repayment structure. These changes affect how much students can borrow and how repayment and forgiveness work after graduation.

What if I already have Graduate PLUS Loans?
If you already have Graduate PLUS loans and stay in the same program, you can typically continue borrowing under current rules for a limited time (either for the remaining length of your program or until you finish your program) up to the cost of attendance. You must remain continuously enrolled through the Fall and/or Spring semester in a minimum of 6 credits per semester.

Note that the published length of Pace’s programs is based on enrolling full time. If a student that has been in a full-time four year program for three years and hasn't finished goes part time, they will only have one more year of eligibility, not three.

A leave of absence will end this eligibility. New students do not have access to this program.

What happens if I reach the maximum borrowing limit?
If you reach the maximum borrowing limit — either annual or lifetime — you’ll need to cover any remaining costs through scholarships, fellowships, assistantships, employer benefits, or private loans. This makes early financial planning critical, especially for higher-cost graduate or professional programs.

What Prospective Students Can Do to Explore Funding and Apply to Pace

Securing financial aid can feel like a complex process, which is why Pace University’s Financial Aid Office remains dedicated to supporting the Pace Community throughout these changes and beyond. We encourage prospective students to visit our Financial Aid page to learn more about the funding options at Pace.

We encourage you to connect with the Financial Aid Office if you have questions about loans, grants, scholarships, or other aid options. Appointments are available in person, by phone, virtually, or as walk-ins. Just click on our Qless contact request to schedule an appointment and a financial aid representative will be with you as soon as possible.