New Federal Student Loan Limits Drive Borrowers to Private Lenders, Raising Concerns for Access to Education
New federal student loan limits, enacted under President Trump's 'Big Beautiful Bill,' are compelling a growing number of students to seek private loans to finance their education. These changes, which took effect recently, include caps on federal loans for specific programs and limits on the amount parents can borrow. For instance, professional degree programs now face a $200,000 federal loan cap, while other graduate programs are capped at $100,000. Previously, graduate students could borrow up to the full cost of their degree. The overall lifetime borrowing cap for new borrowers is set at $257,500. This shift has led to increased anxiety among students like Chloe Frabotta, a physician assistant student in New York City, who had to supplement her federal loans with private ones due to uncertainty about her program's eligibility for higher limits. The private lending market has seen a significant boom, with companies like SoFi and Sallie Mae reporting substantial increases in student loan originations.