Should Professional Students Avoid Grad PLUS Loans in 2026?

Some borrowers in professional school may want to reconsider taking out Grad PLUS for the 2026-2027 school year.The decision used to be easy: borrow whatever you need from the federal government and figure out income-driven repayment (IDR) later.That changed when the One Big Beautiful Bill Act (OBBBA) passed.The OBBBA put strict caps on borrowing for professional school.

Only $50,000 per year is allowed for certain degrees.And some professional programs, like the nurse practitioner (NP), physician assistant (PA) and doctor of physical therapy (DPT) degrees, qualify only for $20,500 per year.  That said, students who already took out at least one federal loan for their degree program before July 2026 are grandfathered in for borrowing limits, meaning they can take out Grad PLUS loans to cover up to the full cost of attendance for the 2026-2027 school year.But there are major downsides to doing this for some borrowers.For most professional students, Grad PLUS is still the right call in 2026-2027 — but a specific group should think twice before signing the master promissory note.

The Grad PLUS risk for fourth-year non-PSLF students If you’re not going for Public Service Loan Forgiveness (PSLF) and you’re a rising fourth-year dental or vet student, for example, you may have a large amount of debt already.And you may think that you need to borrow Grad PLUS to finish year four.But unfortunately, if you do that, you’re locked into the Repayment Assistance Plan (RAP) instead of the much more affordable New Income-Based Repayment (New IBR) plan, which is available to anyone who took out their first loan after 2014.How RAP and New IBR differ on forgiveness Under New IBR, your payment is 10% of the income you earn above 150% of the federal poverty guideline, and your remaining balance is forgiven after 20 years.

RAP also takes 10% of income, but the income exclusion is much smaller — meaning a bigger share of your paycheck counts as ‘discretionary' — and forgiveness doesn't kick in until year 30.If you take out even $1 of Grad PLUS loans after July 1, 2026, the only IDR plan you have access to is the RAP plan.A graduating dentist's $450,000 decision Pretend you’re a graduating dentist, and you’re taking out $100,000 to finish the fourth year of your degree.Let’s say you already owe $350,000 and you have a choice between taking out $100,000 in Grad PLUS loans or $100,000 in private student loans at 8% interest.

Here’s how the math looks for New IBR versus RAP: The difference in payments between New IBR and RAP is enormous.This reflects 10 years of additional payments and the worse deduction that the RAP plan provides.What about the cost of private loans, though? If you did New IBR, you would have to borrow private for year four.Let’s see what the cost is if you refinance the private loans after graduation: Now here’s the cost of using RAP for all $450,000 of loans: Here’s what the above numbers mean: the total cost in today’s dollars is similar between RAP only and New IBR + private loans in year four.  The cost in today’s dollars for the RAP option is about $336,000, as shown above.

And the cost using New IBR + private loans is about $347,000.So technically, RAP would win in this case.  But these numbers would swing wildly depending on the dentist's terminal income.If you made $300,000 to $400,000 as a practice owner one day, the RAP option would look more expensive.That said, it doesn’t seem to be catastrophically more expensive.

Certainly, there are bigger negative financial decisions one could make, such as not having any disability insurance or making poor investment decisions.Who should definitely use Grad PLUS in 2026 Anyone who already has a high debt-to-income ratio should just continue maxing out their  Grad PLUS loans.If you were a forgiveness case before, borrowing more makes you even more of a forgiveness case.Anyone planning to pursue PSLF will notice that RAP and the other IDR plans both result in 10-year forgiveness at a relatively minor payment difference.

Anyone who has at least another year left of school following the 2026-2027 school year would also probably benefit from using Grad PLUS loans, as the cost of private loans would be magnified in that case.  Essentially, income-driven repayment allows you to convert your debt into a tax.When your debt is at least twice your expected income, it’s generally an excellent trade to load up on all the federal loans you can get.Who cannot use Grad PLUS in 2026 Anyone who is taking out their first loan for a program after July 2026 cannot access Grad PLUS.Anyone who takes a leave of absence from their school after that date also loses access to Grad PLUS.

If you won’t be able to borrow Grad PLUS in 2026, you need to consider the pros and cons of financing through private loans once you’ve exhausted the very low federal loan caps.Private loans don't qualify for IDR or PSLF, so once you sign for one, you're committing to paying the full balance back on the lender's schedule.Generally, it’s much better to have a professional degree than not have one, but the cost does matter.See how low an interest rate you can get from private lenders like these.

If your expected debt-to-income ratio is less than 2:1, it’s probably a reasonably sound investment, particularly with all the fears of job loss due to AI (medical and professional degrees are likely safer than many think due to compliance, legal rules and barriers to entry like licensing requirements).Grad PLUS is still the better call — unless you're a high earner What the math above suggests is that most future physicians, dentists, vets, lawyers and others weighing whether it makes sense to lock themselves into RAP by taking out Grad PLUS this year should probably just bite the bullet and take them out.At least it’s federal debt, and it keeps the option on the table for a future, more generous IDR plan should Congress change parties one day.That said, if you will make a very high income (generally the $300,000+ range), the cost of paying for an extra 10 years under New IBR will push many borrowers to just pay off the loans.

And if that’s the case, borrowers only needing a small amount of federal loans for the 2026-2027 school year should weigh private options.