Can Private Student Loans Fill the Gap?

The One Big Beautiful Bill Act (OBBB Act) will create seismic shifts in the way grad and professional school is paid for.Starting July 2026, any student who hasn’t yet started borrowing for their current program will face new, lower federal loan limits — the lowest since 2006.How much of a funding gap will exist for various professional and graduate degree programs? And will private student loans be able to fill the gap? We’ll tackle these questions and more for anyone who is concerned about the future state of financing higher education post OBBB Act.  Which graduate and professional degrees will need access to private student loans? The OBBB Act still needs official regulations before we’ll know exactly how it will be implemented.For now, here’s what we know about the new borrowing limits for students starting programs after July 2026: Graduate programs: Up to $20,500 per year, with a $100,000 aggregate limit.

Professional programs: Up to $50,000 per year, with a $200,000 aggregate limit.What qualifies as a graduate vs.a professional degree program for OBBB purposes? We’ll have to wait and see.Surely med, dental, vet and law school would qualify.

Less certain are programs like PA school, engineering, teaching, etc.Until we get clarity on which programs will qualify as professional school (and which ones won’t), we have to assume that any program with an average combined cost of tuition and living expenses over $20,500 per year might require access to private student loans to fill the gap.Any professional school that costs on average more than $50,000 per year will also need access to private student loans.Degrees that may require private student loans for students to attend Here’s a list of the average student debt by profession, based on responses from more than 8,000 Student Loan Planner readers in a September 2025 survey.  Of course, the average student debt for our readers is larger than the national average for each degree program, but our readership represents a very significant chunk of the high-debt borrowers in the United States.

Physicians, dentists and dental specialists top the list of professional degree programs that would need access to private student loans to continue charging their current costs of attendance.For example, a student attending a private dental school might need to borrow $150,000 a year, but federal student loans would only provide $50,000 of that.Something would have to give in this scenario as private student loans would be unlikely to make up the $100,000 per year difference.Programs like PA school, teaching, engineering, etc.

are not traditional four-year professional degree programs.Even if a master’s is functionally required to practice, it’s unclear if the current Department of Education would allow these programs to access $50,000 per year limits.In some professions, like teaching, a master’s degree is only required in certain states or localities.Because of that, many of these degree programs could still fall under the stricter borrowing limits — even if you might think of them as professional degree programs.

How Grad PLUS going away will hurt graduate (not professional school) programs more Graduate degree programs have historically not had a different borrowing limit than professional school, thanks to Grad PLUS since 2006.If a teaching master’s student in New York City needed an extra $30,000 for living expenses due to higher cost of living, she could simply ask her financial aid office for the money — as long as the overall amount was in line with the school’s estimated cost of attendance.But with the new rules, that same master’s student might only get $20,500 per year of federal student loans, regardless of the total cost of attendance.That will mathematically make many graduate degree programs impossible to provide.

Private lenders would likely charge double-digit interest rates to cover the gap, making some degrees financially out of reach.In contrast, a medical student who needs an extra $40,000 per year in private loans is far more likely to get approved, thanks to the high earning potential that comes with becoming a physician.Will private student loans meet the need of professional degree programs? The short answer: only partly.Any student attending a moderately priced in-state program will probably get approved by a private lender once these lenders adjust to the new model of student loan borrowing.

Successful lenders will offer no-cosigner products to students attending ROI professional degree programs with low expected debt to income ratios.But high-cost private schools, many in big urban areas with high costs of living, might struggle to attract students simply due to the challenging underwriting requirements of a private lender.For example, suppose a student needs $100,000 per year to attend a private dental school in NYC.Will they get approved for that in addition to the $50,000 per year federal loans for a degree where they expect to earn $200,000 a year? It’s extremely unlikely.

That means many schools will need to turn to students from richer families who do not need to borrow as much.The alternative is cutting their prices, some either broadly or selectively, in the form of “merit aid,” which will really be strategic tuition discounts in most cases.Private student loans will be in the mix, but a lot of grad and professional degree programs will still close What’s clear is the status quo will not stick around.The highest ROI programs will likely work with private lenders to secure borrowing options for their students, and the moderate and high cost programs will either turn to students from wealthier families or they’ll reduce their cost.

In a recession though, private lenders will seize up or reduce their lending limits, which means the new OBBB Act rules likely set the stage for a higher education funding crisis in the next recession.Ultimately, a student needs to worry about what they control, which is the overall cost you’ll pay for your education relative to the expected earnings.And schools can adapt by trying to enroll students before the July 2026 deadline if possible.If that’s not possible, then schools will have to take action to fill their classes as much as possible.

But it’s clear that some schools will not be able to do that without Grad PLUS loans.So the only guarantee is that chaos is coming to the marketplace of higher education at the professional and graduate school level, and borrowers and schools that adapt will do well.