Published 17/02/
Short version New rules from the Tax Act and related administrative changes have tightened how much law and graduate students — and their parents — can borrow. Annual and lifetime loan caps now interact with colleges’ cost-of-attendance math and lenders’ own underwriting limits, which means students who once relied on Grad PLUS or open-ended federal borrowing may face funding gaps. This guide explains what changed, how annual and aggregate limits work, who decides what, and practical next steps for law students and families.
What actually changed – The Tax Act takes effect for loans first disbursed on or after July 1. Key moves: – Parent PLUS loans: capped at $20,000 per year and $65,000 lifetime per child. – Grad PLUS: eliminated for disbursements on/after July 1. – Graduate aggregate borrowing: lowered from $138,500 to $100,000. – Professional school aggregate cap: set at $200,000. – Repayment options: the statute narrows choices to a standard fixed schedule and a new income-based “Repayment Assistance Plan” (details to come in rulemaking). – Schools, servicers and private lenders are updating systems, promissory notes and counseling materials to reflect these changes.
How annual and aggregate limits combine — in plain language Think of borrowing limits like two gates: 1. Annual limit — how much you can take in one academic year. 2. Aggregate limit — the lifetime ceiling across your degree program.
Schools start with a certified cost of attendance (tuition, room & board, books, travel, personal expenses). They subtract scholarships, grants, employer aid or other resources. The remaining “net cost” is the pool that federal loans may cover — but only up to the annual and aggregate ceilings. Private lenders usually mirror the same math, but they often add discretionary caps or different underwriting rules, so “available” funds can vary by lender and by student credit profile.
Why this matters for law students – Law students are treated as graduate students, so subsidized loans are generally off the table already. That means borrowing has long leaned on unsubsidized Direct and Grad PLUS loans. – With Grad PLUS removed, many law students will hit the new professional or graduate caps sooner. Programs with higher tuition or multi-year living costs may not be fully fundable with federal loans alone. – Result: more students will need private loans, institutional scholarships, work-study, savings (529s, personal funds), or to delay enrollment.
Who’s involved and where problems happen – Financial aid offices: certify cost of attendance and package federal aid. – Registrars/grad-school admins: determine enrollment status (full-time/part-time), which affects limits. – Federal servicers and loan program administrators: enforce statutory ceilings and handle repayment rules. – Private lenders: set underwriting and co-signer policies that may differ widely. – Students, families and advisers: submit appeals and paperwork when calculations don’t match needs.
Common friction points: transfer credits, leaves of absence, program changes and mid-year status updates — these can produce manual adjustments, delays, and unexpected shortfalls.
Practical implications – Less federal borrowing means more private credit in the market. Private loans can offer larger caps but often come with higher or variable rates, origination fees, and fewer borrower protections (limited income-driven plans, no federal forgiveness). – Families with resources and financial savvy will generally navigate appeals and private-shopping better; less-resourced households risk larger gaps. – Law schools may need to rethink scholarships, bridge funding, and counseling to prevent enrollment drops.
What students and families should do now 1. Re-run your budget under the new caps. Include tuition, living costs, bar prep and realistic living expenses — not just tuition. 2. Talk to your financial aid office early and often. Ask for a detailed award letter that shows how annual and aggregate limits were applied. 3. Check enrollment status rules. Part-time vs full-time changes year-to-year can affect annual allowances and aggregate progress. 4. Explore alternatives: institutional loans or grants, private education loans (compare rates, fees, co-signer release policies), paid positions, or delayed enrollment. 5. If you need private loans, shop several lenders. Run monthly-payment scenarios under fixed and variable rates, and stress-test for income shocks or rate spikes. 6. Document extraordinary costs (dependent care, disability needs) and file cost-of-attendance appeals promptly — schools often have templates and processes for this.
Specifics to watch in the months ahead – The Department of Education will publish implementing guidance and update servicer systems, master promissory notes, and disclosure forms. Expect interim guidance and phased technical rollouts before July 1. – Rulemaking will flesh out the new Repayment Assistance Plan (eligibility and caps not finalized yet). – Private lenders may expand graduate products or update underwriting; some institutions are drafting bridge-grant or loan-fund responses. – Consumer groups and oversight agencies are likely to watch for compliance and may push for clearer disclosures or protections for private loans.
What actually changed – The Tax Act takes effect for loans first disbursed on or after July 1. Key moves: – Parent PLUS loans: capped at $20,000 per year and $65,000 lifetime per child. – Grad PLUS: eliminated for disbursements on/after July 1. – Graduate aggregate borrowing: lowered from $138,500 to $100,000. – Professional school aggregate cap: set at $200,000. – Repayment options: the statute narrows choices to a standard fixed schedule and a new income-based “Repayment Assistance Plan” (details to come in rulemaking). – Schools, servicers and private lenders are updating systems, promissory notes and counseling materials to reflect these changes.0
