Jul 1, 2026 · 34 min
Trump administration introduces strict caps on federal student loans
Why Americans Will Get Less Help Paying for College
The new borrowing limits and earnings tests represent a fundamental shift in how Americans finance higher education, potentially altering university pricing and student access.
- 1The federal government is introducing strict annual and lifetime caps on Parent PLUS and graduate student loans.
- 2A new graduate earnings test will restrict federal funding for academic programs that do not boost graduate incomes.
- 3Experts warn these limits may drive students toward riskier private loans rather than lowering university tuition.
Don't miss
Ron Lieber details how universities capitalized on unlimited federal borrowing to rapidly expand highly profitable master's degree programs.
The brief
The Trump administration is launching a major overhaul of the federal student loan program, introducing strict caps on Parent PLUS and graduate student loans to rein in the nation's mounting student debt crisis.
New regulations will also implement an earnings test for academic programs, cutting off federal funding to degrees where graduates fail to earn more than a typical high school graduate or bachelor's degree holder in their state.
Personal finance columnist Ron Lieber explains how decades of minimal underwriting and the financial pressures of the 2008 recession led to an explosion of costly, highly profitable master's programs at major universities.
While the policies aim to force universities to lower tuition, critics warn that capping federal aid without other reforms may simply push vulnerable students toward riskier, high-interest private loans.
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