Department of Education Changes Grad PLUS Rule: Credit Hours Now Determine Eligibility
Students' access to uncapped loans is now calculated based on credit hours.
1What is Grad PLUS?
Grad PLUS is a federal loan program in the U.S. that allows graduate students to cover their education expenses. These loans offer unlimited borrowing. However, a new law effective July 2026 imposed limits on these loans. A transition period was granted for current students, but the method of calculating this period has changed.
2How Credit Hours Became the Deciding Factor
The Department of Education now considers completed credit hours instead of enrollment duration when calculating students' access to uncapped loans. This change could negatively impact students with heavy course loads. For example, a student who completes 24 credits in a 36-credit program is considered two-thirds done based on credit hours.
3How Students Are Affected
The new calculation method could benefit part-time students. For instance, a student who completes 9 credits in a year is considered 25% done, leaving more time. However, full-time students with heavy course loads may appear to progress faster and reach the loan limit sooner.
4Issues in the Transition Process
This change by the Department of Education has caused confusion among students and financial aid offices. Students who took a leave of absence or transferred schools may lose access to uncapped loans. This could lead students to seek alternative funding sources to complete their education.
5Background of the Law
The law limiting Grad PLUS loans was passed by Congress under the 'One Big Beautiful Bill Act.' This law set annual and total borrowing limits for graduate students. For example, master's and doctoral students have an annual limit of $20,500 and a total limit of $100,000.
6Alternatives for Students
Students who reach federal loan limits may turn to private student loans. However, these loans often come with higher interest rates and less flexible repayment terms. Therefore, students must carefully plan their finances and evaluate alternative funding options.
7The Department of Education's Stance
The Department of Education stated that this change is not new and was discussed in earlier virtual office hours. However, this calculation method contradicts the final rule text published in May 2026. The Department may release an updated FAQ or 'Dear Colleague Letter' to address this inconsistency.
8Conclusion and Recommendations
This change requires graduate students to revisit their financial planning. Students should track their credit hours and stay in touch with financial aid offices. Additionally, they should carefully review repayment terms and interest rates before considering private loan options.