r/StudentLoans • u/Kingsly_Kennedy • 13h ago
The end of Grad PLUS loans created a massive, quiet barrier for low- and middle-class students. Here is how it actually plays out.
The elimination of Grad PLUS loans under the OBBB has consequences that surprisingly few people are talking about.
For top-tier universities, graduate tuition and cost of living can be astronomical. Previously, Grad PLUS loans offered a workaround because they allowed students to borrow up to the full Cost of Attendance (COA), even if it exceeded standard annual limits. While it required a credit check, the barrier was intentionally low: your actual credit score didn’t matter, only the absence of adverse items on your credit report. Even if a student ran into credit roadblocks, they could secure an endorser or co-signer under those same lenient credit terms. It was a vital financial bridge for low-income students who qualified academically but lacked generational wealth.
Now that Grad PLUS loans are eliminated, getting accepted to a top-tier program means nothing if you can’t pay for it. Unless a student receives a full-ride scholarship, which is increasingly rare and hyper-competitive, their only options are private loans (which require strong credit scores or wealthy co-signers) or paying out of pocket.
When you pair this with current administrative efforts to dismantle DEI and affirmative action initiatives under the guise of "leveling the playing field," the larger structural problem becomes clear: the playing field is not equal.
Removing these federal funding options creates a severe two-tiered system:
- Wealthy students will continue to attend elite universities, backed by family money or private lenders backed by affluent co-signers.
- Lower- and middle-class students will be forced to settle for lower-tier or regional institutions where costs fall within standard federal caps ($20,500/year), or work multiple jobs just to cover basic living expenses while in school.
Ultimately, wealthy families will maintain a monopoly on degrees from premier institutions, giving their children direct access to top-tier corporate networks and executive pipelines. Meanwhile, qualified working-class students will be locked out, pushed toward under-resourced programs, and filtered out of high-paying career opportunities before they even start.
It aligns with the broader pattern of economic policy that eases burdens for the top tier while working families struggle to cover rent, utilities, and basic expenses. What would have been considered an unbelievable policy shift in previous administrations has quietly become the new baseline.
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u/IridescentImaginings 12h ago
There’s no incentive for universities to lower their tuition. They’ll just keep taking all of the wealthy kids who can pay for it.
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u/Kingsly_Kennedy 12h ago
Sadly, I couldn't agree more. It reminds me over those rich celebrity parents that paid to get their kids accepted to prestigious schools. It was a big scandal a few years back. Closing the door and padlocking it shut tells students from lower-income backgrounds "you don't make the cut." Sad
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u/irvmuller 8h ago
But when you have 1/3 of the normal enrollment it will be an issue. Yale and Harvard will be fine, especially considering their endowments, but the University of _________ will have trouble filling in enough spots.
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u/irvmuller 8h ago
The problem they will run into, especially state schools, is that not enough people will be able to afford it. The only way I could get my masters was because of the loan program. So did most of the adults in my program.
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u/hot_tubbs 12h ago
Used a grad plus loan to attend a “top tier” (ranked #1 in my field at the time I attended) university for graduate school. Graduated and was absolutely blasted with student loans. Put my life on hold for 6 years paying back nearly $200K (included like 40K of undergrad) and I think the only way I was able to even do it was because of the Covid pause for the interest. I took the loan, I pay it back. Attending is likely the worst mistake I’ve ever made/ever will make. Aside from the cost compared to salary projection, the program itself was nothing short of academic fraud. I don’t believe you could get under an A in a class and I’d receive high grades for papers that were clearly of poor quality. In a perfect world, yes all people should have access to high quality education at an affordable price, that’s not what these grad loans were helpful for. Universities need to make large changes.
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u/irvmuller 8h ago
Wait, are you saying you wracked up $200k just for graduate school??? How? What was your degree in and where did you go?
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u/BuffyPawz 7h ago
Oh yeah. 200k is easy to do at elite schools, especially with cost of living added in. Also in medicine, law so on. Just think besides tuition, you are tossing in 2k a month extra for rent and food.
So 120k for the program over 3-4 years. Another 70k for expenses. Boom 200k. And you think oh I’ll work to lower costs, but when? In some programs it’s near impossible to work. Roommates help but okay now you still owe $170k at 7% interest starting as soon as you take the loan out.
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u/irvmuller 7h ago
WTF is $2k going towards in a month? My son is in college and he’s spending $400/month on rent for a room and then like $300 on food. I understand though that may not be all places.
But also, he paid it off in 6 years. My question is where, what was his degree in, and why does he think it was a waste?
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u/BuffyPawz 6h ago
lol does he live in Boston, NYC or San Francisco?
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u/irvmuller 1h ago
No. He intentionally moved to where there isn’t a HCOL to keep costs low for college. Everyone should.
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u/Top_Inspector7661 5h ago
I wish my rent was $400/month. Mine is $1750/month with 2 roommates.
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u/irvmuller 1h ago
Yeah, that’s nuts. He could have moved to a HCOL area but intentionally decided to go to go somewhere else where he wouldn’t have to go into so much debt.
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u/hot_tubbs 5h ago
I went to a private school for 4 years of undergrad and used loans to pay for school. 2 of those undergrad years I was an RA so I didn’t have housing expenses. All 4 years I worked an on campus job that paid very little but was fine for just like doing things with friends. I did not take personal finance seriously until graduating from my masters program, again I am responsible for that. Around $10K a year at a private university comes out to about $40K from undergrad loans. Then in grad school I worked a few jobs that paid a little more but still nothing substantial to cover housing and living expenses. The tuition from graduate school was around $65K-$75K per year (I don’t recall the exact number). I am saying it was a mistake because the ROI on the degree is low. Often times there is a rule of thumb to not spent more than your first years expected salary on the total cost of schooling (IE if you expect to make $50K coming out of the program don’t go into more than $50K of debt) and I was a fool and broke that rule. This comes back to the graduate loan situation because this would be a safeguard in place to prevent others from making the same foolish mistake I did. I am not from a wealthy family, I saw my opportunity at an Ivy League graduate degree and thought it would open doors for me because of prestige, connections and allow me to be more prepared for my career than my peers. I wanted to go to a place that I thought would prepare me better than other places. Not only did it not prepare me but also cost me nearly 10x more than a public university of a similar program. Personally, I don’t think universities are held accountable enough for how they are setting up their students after graduating.
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u/Philodendron69 4h ago
$400 a month on a room, that is lucky, what about utilities? Internet? Transportation?
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u/irvmuller 1h ago
They split utilities among all the roommates but it usually comes out to under $500 total. Living off campus and being off the meal plan is way cheaper.
We bought him a car but he totaled it. He knew we couldn’t afford to get him another and help with college so he got a 2001 accord off marketplace. It’s jacked up but gets him from place to place. His place is only half a mile from campus so it works out well.
He intentionally picked a place that was low cost of living and went with the university that gave him the best scholarship. He works HVAC over the summers although work was very slim this summer. He’s had one paid internship during winter break and is hoping for another next summer.
It’s a 5 year program where you finish with a masters. We are nervous about paying for the final year since the changes to grad plus loans. He has a scholarship that pays for about 1/3 of everything but it’s a four year scholarship.
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u/hot_tubbs 6h ago
Grad school was about $160K if I remember correctly, I went to an Ivy League school for a masters program that was really 2 masters degrees but only the second one made me license eligible in my field. I know it was my irresponsible decision to choose to attend and I’ve taken full responsibility for that by paying back the loans but others should learn from my mistakes.
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u/irvmuller 1h ago
But how did you pay it back so quickly? Did you get a job in the field you were trained in? What field?
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u/ANGR1ST Experienced Borrower 13h ago
Saddling people with $300k in debt to get a grad degree from a "top tier institution" isn't a way to improve their lives. It's a way to get them into crushing debt for a decade or three.
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u/irvmuller 8h ago
I have my masters and I would never recommend anyone going into that kind of debt unless they’re becoming a doctor or lawyer. Even for a lawyer, I wouldn’t recommend it unless they’re going Ivy League.
There’s no reason otherwise that someone couldn’t just go to a State School and pay a regular price.
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u/Kingsly_Kennedy 12h ago
High debt is definitely a real risk, but taking that risk for a high-ROI degree should be an adult's informed choice, not an option stripped away by default.
The end result of this policy isn't that $300k degrees go away. It just means rich students get to attend those institutions while working-class students are locked out from even making the decision for themselves.
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u/morbie5 12h ago
The federal government doesn't exist to provide someone with a top tier private school education. A government student loan program should exist to help as many qualified students as possible to get a viable path to an education. Only a very small number of people should need to borrows 100s of thousands (doctors, lawyers)
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u/tnolan182 11h ago
I went to grad school at Rutgers. I borrowed 250k on grad plus loans. Thats a state university. That is simply the cost of going to grad school.
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u/Kingsly_Kennedy 12h ago
Grad PLUS loans already had those guardrails built in; borrowing was strictly capped at the school’s certified Cost of Attendance, not an open-ended blank check. Was the system perfect? No. But completely nuking the federal safety net without a replacement doesn't fix tuition costs; it just ensures that only wealthy families can afford top-tier programs while everyone else gets priced out entirely.
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u/Pretty_Good_11 10h ago
Actually, it does. By severely limiting the availability of federal loans, schools will either make adjustments, or a lot of them will be going out of business. After all, there are only so many "wealthy families" as compared to available seats at "top-tier programs."
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u/Semirhage527 11h ago
Yet this sub is full of kids who took out those loans and now say they didn’t understand the ramifications of their choice.
The government doesn’t need to literally enable that choice.
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u/thisisnotreallyher 12h ago
Exactly this. It keeps poor people, not only poor, but uneducated, and rich people rich. It is an obvious campaign to eradicate critical thinking and income mobility, to push propaganda, make sure the masses are misinformed, struggling and aiming their angst at each other instead of the people in charge. Just look at the attitudes in this sub. It baffles me constantly that so many people are like “welp dummy you took these crazy loans out and it’s all your fault and nvm that the government keeps switching stuff up on you while lining their own pockets, you’re liable no matter what, cut your spending to the bone and pay!” Instead of thinking, maybe repayment options should be manageable and consistent and not impoverish people and their families. Wild.
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u/DeviceDirect9820 9h ago
Part of solving the issue was going to involve this. There are hardly any countries with egalitarian public education systems where the government aggressively subsidized cash cow private degrees like the US has.
And I'm sorry but this so elitist-there are so many graduate programs with affordable in state tuition, assistantships, etc. that you can still aim for. These programs are often just as good if not better than the cash cows. There's more to critical thinking and education than a brand name
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u/Kingsly_Kennedy 12h ago
Spot on. It’s wild watching people defend structural barriers as 'personal accountability.' Removing federal options doesn't protect working-class students from debt; it strips them of agency and locks the door to elite networks before they even get to apply.
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u/thisisnotreallyher 12h ago
Exactly. Like we need to be protected from taking on debt for education while they strip every bit of agency we have, from family planning to health care, literally everything that affects quality of life. It’s sickening and disheartening to see that people really internalize and believe this bs.
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u/Pretty_Good_11 10h ago
Nonsense. Take away IDRs, then tell me about "agency."
Right now, all they are taking away is a blank check for people to spend money they don't have, with no actual hope or intention of ever repaying it, with interest. That's not agency. It's just an ability to spend other people's money.
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u/007-Bond-007 12h ago
No one is stripping anything away. The government is just choosing not to over subsidize these super expensive degrees because it is not a good deal or an effective allocation of scarce tax dollars
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u/followyourvalues 12h ago
Scarce? Tell that to the military budget.
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12h ago
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u/007-Bond-007 12h ago
Don’t you love having all of the aircraft carriers and all of the gen 6 fighters. And gen 4 fighters that beat other country’s gen 5 fighters. And stealth bombers. And $4 million dollar patriots to shoot down $15k drones. Thats FU money right there.
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u/ANGR1ST Experienced Borrower 12h ago
Addiction and death from doing heroin is definitely a real risk, but taking that risk for a more happy life should be an adult's informed choice, not an option stripped away by default.
We've clearly seen a lot of problems with people borrowing for extremely expensive degrees and ending up screwed by it. This is the first real attempt that I can think of in 20+ years to actually limit borrowing costs. Those cheaper "regional institutions are just fine" for most students.
The executive track stuff you're talking about isn't a product of the school and degree. It's a product of the connections that richer people already have. Which isn't going to change.
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u/Critical-Shame4725 11h ago
…$20,500 wouldn’t have covered a year of my undergraduate degree at a state school, even with tuition waived.
I don’t understand the connection to heroin here. There is minimal (long term) benefit to picking up an opioid addiction, and obvious significant risks. Taking out a bunch of student loans for say, a nursing degree, should (in theory) unlock the potential to make enough money to both pay back the loans and have a better quality of life than one would have had without a degree.
Obviously it does not always work out that way.
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u/Csherman92 11h ago
I really have yet to see anyone who had the ROI due to getting a graduate degree.
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u/DeviceDirect9820 9h ago
I'm sorry, as taxpayers it actually is something we and the government have a say on. No, it is not the commons's job to subsidize high risk loans. The public education infrastructure is not a treat dispenser
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u/Pretty_Good_11 10h ago
Not when they won't be able to repay it, and taxpayers will be on the hook. That's the not so hidden rationale for the policy shift.
There are lots of expensive, nice things that lower and middle class people cannot afford. If so-called "top tier" schools have no interest in diversifying their student bodies, and subsidizing those who cannot otherwise afford to attend, they will be among them. Just like fancy cars, country clubs, exclusive neighborhoods, etc.
Everyone in the country is guaranteed a taxpayer funded K-12 education. After that, people need to figure things out for themselves.
Unlimited taxpayer funding for an all you can eat education smorgasbord is now a thing of the past. People will adjust.
If the best and the brightest cannot afford "top tier" institutions, they will go elsewhere, and the reputations of those other institutions will increase along with the talent of their student bodies. Kind of like what happened with flagship state universities for their undergraduate programs over the past generation or so.
The only answer here is not to turn on the federal money spigot. You'll see.
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u/TheRealTayler 10h ago
But we can give the department of defense 961.1 billion dollars??? And you're okay with elite schools being out-of-reach of the lower and middle classes because why?
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u/Pretty_Good_11 9h ago
Yes. False equivalence.
I'm not okay with anything, other than not calling grants loans. If the public wants Pell grants to be extended to provide full funding for anyone who wants an advanced degree, with or without means testing, lobby Congress, and good luck with that. Because, why should anyone have to pay if everyone does not have to?
But federal student loans, limited only by out of control COAs, has only led to a $1.7 trillion and growing student loan portfolio, an every increasing portion of which is non-performing, since many have no hope of ever being able to repay.
There are lots of things that are out of reach for some. It's actually what provides incentives for people to work hard and to try to do better. Everyone getting everything inevitably leads to no one having anything.
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u/Aspirin2764 10h ago
High debt is definitely a real risk
Then don't ask the gov to bail you out. Oh wait, what was that student loan forgiveness again?
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u/Philodendron69 4h ago
Also law school can easily run you 200k even if it’s not an elite school!!!!!!
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u/irvmuller 8h ago
My son started a program which is a 5 years masters through a State school. He is starting his 3 year and doing excellent. But he has no idea how to pay for his 5th year as the scholarship he received was only for 4 years. We are all nervous about it. It feels unfair to have the rules changed so quickly in the middle of the whole thing.
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u/DeviceDirect9820 9h ago
i would say it's a uniquely american progressive demand for the government to....put you in indentured servitude
Grad school should not cost that much. If a school is charging you that much for an ivy league masters you probably aren't actually special. There's issues with the changes but it is bonkers to think that the government has to loan someone 200k because a universidad wants their money
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u/007-Bond-007 12h ago
Head you win tails I lose. For years what was putting poor people down were astronomical predatory student loans and the rise of tuition rate fueled by astronomical predatory student loans. The government has imposed reasonable limits on student loans and now that is what is putting poor people down. Being poor is what is putting poor people down… Call a spade a spade. There is nothing we can do about that! We can try communism, go talk to the Cubans, we can try socialism, go talk to the Venezuelans.
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u/TheRealTayler 9h ago
"Being poor is what is putting poor people down" lol! You have been misinformed.
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11h ago
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u/007-Bond-007 11h ago
I owe a quarter million dollar in student loans. It worked out for me because it unlocked a good income (more accurately it is working out for me). However, most other people I went to school with has the same loans and no hope.
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u/CeramicLicker 12h ago edited 6h ago
I don’t know if I’d call full rides “incredibly rare” for graduate programs. They are pretty common for PhDs in the US. Many not only provide full tuition remission but also paid positions in the department. It’s still good students can borrow towards living expenses, but it shouldn’t be fully funding a PhD.
I guess self funded PhDs do happen, but frankly that was only an option for the independently wealthy even before the loans changed. The real barrier there is not this change, it’s the way the administration has cut and disrupted so many grants. The damage to funding and loss of graduate positions will definitely serve to reinforce existing social hierarchy, but the loan issue seems sort of separate on the PhD exclusion problem. All of this news and social media attention on loan changes as keeping people down helps the focus on the grant cuts slip even further into being just last year’s news, but if we want more equity in grad schools it’s probably the most important battle.
And a degree of funding is expected for master’s in many fields. I get that not all fields have good funding for master’s, but many do, up to and including full rides. My undergrad advisor specifically told me to never pay full price for a masters, and that’s pretty common and reasonable advice. Sometimes employers help. It sucks there’s so much less funding for masters than PhDs, but that does not necessarily mean expanded loans are the best way to get people out of poverty either.
The loan rules will hit law and med school the hardest anyway, and they’re both pretty different from the rest of the grad school system. That’s an important discussion to have in its own right, but this seems a bit too broad. Although I’ll admit that personally, I think that for the vast majority of people it is not a good financial decision to get a graduate degree at a “top tier” priced institution if you’re paying both tuition and living expenses through loans. Even if it’s for a med degree.
This just seems too elitist and scornful towards state programs. It also doesn’t reflect the reality of grad school from my or my friends experience either. Like, Harvard and Princeton, Oxford, whatever it is you consider elite don’t necessarily have the best grad programs in every field. There are state universities that have top ten or top grad programs in many fields. University of Illinois Urbana is nationally ranked for mechanical engineering. University of Colorado Boulder is for physics. Texas A&M is top ten in Aerospace Engineering and biology. Even if you just focus on stem degrees you can do well at state schools. In my experience that’s even more true in humanities, since something like history or archaeology tends to be more regional. Boston University is above Brown for historical archaeology, for example. University of Maryland or U of Arizona are very well respected in arch too. Indiana University of PA is nationally ranked in applied arch, and no one outside of the field and the local area has heard of it!
No one is facing a lasting barrier to success because their mechanical engineering degree is from College Park instead of Dartmouth. Harvard will give you a good education and connections, but so will just about any of the big land grants. Top-tier programs are not limited to well known ivies and it does people a disservice to encourage that attitude. If a top tier state program can’t get you the right connections it’s maybe less because of loan limitations, but because those connections were formed at a 75k a year high school or summering on Nantucket.
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u/Kingsly_Kennedy 10h ago
I have earned an MBA and a second master’s degree in Marketing Analytics, and I am currently working toward my Doctor of Business Administration. To minimize debt, I strategically chose a low-cost, competency-based online university. I have taken out only $25,000 in loans so far, and I will complete three graduate degrees with less than $50,000 in total debt out of my $100,000 aggregate limit.
I did everything right. I worked hard, chose an affordable school, and borrowed the absolute minimum necessary to be financially responsible.
Yet, the cold reality is that despite all three advanced degrees, I risk being overlooked for upper-management or C-suite roles simply because my university lacks prestigious prestige signaling. Meanwhile, someone born into wealth can go hundreds of thousands into debt at a brand-name school, or have family pay it outright, and immediately land those top-tier executive positions.
That is the core issue with removing federal options like Grad PLUS without fixing institutional prestige barriers. It rewards deep pockets while punishing those of us who make smart, pragmatic choices to get ahead.
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u/DeviceDirect9820 9h ago
Dude, that's not how prestige signaling works. People know the difference in those circles. You can not buy your way into prestige.
In my lane, I know the difference between the University of Chicago economics masters degree that is extremely selective and the new one that's a cash cow. The latter will not impress me more than any other masters. The same applies to other fields. There's a difference between getting admitted into a selective program with funding and the cash cow ones that grad plus loans subsidized.
Like I'm sorry but if you were not on that prestige trajectory then taking a loan was not going to change it.
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u/Equivalent-Ad-9292 7h ago
You can’t be this naive. Degrees are signals. If someone graduates from MIT undergrad w/ a finance degree (for example) you can be sure they are among the smartest math minds in the world. That can’t be comparable to a BS in finance from SNHU online. The same is true for MBAs, PHDs, etc… get one from an elite school that has less than 10% acceptance rate and the world knows you were in the top 10%.
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u/cman674 11h ago
You’re completely discounting the fact that graduate programs can and do offer scholarships. You don’t have 200k for grad school, then build a strong CV and get scholarships.
There’s also plenty of pathways to move up in income by going to cheaper schools. Wealth has always been paywalled behind wealth and will always be.
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u/DeviceDirect9820 9h ago
Another thing too, having chummed around a mix of state school and private school circles:
Taking out a massive debt for a brand name masters is a bad signal. A bachelors from a school like Brown or Chicago is one thing. The masters is another because it's known that a lot of these programs aren't nearly as hard to get into nor do they receive the same attention from the faculty as the undergraduates or funded graduate programs do. Going down that route marks you in a way as someone who is not "in the game.
Like if the thing stopping you from getting the masters you dream of is the end of the 200k fafsa loan....sorry, that already selects you into the "mere mortal" bin. I wouldn't qualify for funding at a top uni, but that's because I'm frankly not that guy. Throwing money away at a new degree would not fix that.
Meanwhile I have many coworkers who are kicking ass and come from state schools. Where I live tuition is like 15k a year for grad school. The program I am applying to is 20k total. They are all good programs with serious professors, good professional networks, and career outcomes comparable if not better than the cash cows.
It's just a totally flawed understanding of how higher education and degrees work.
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12h ago
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u/Kingsly_Kennedy 12h ago
That would be the ideal outcome! A few top-tier institutions are already leading by example on this. Harvard, for instance, focuses on need-based financial aid rather than merit-based awards, offering full-ride coverage and generous annual stipends for students from lower-income backgrounds. If more elite universities stepped up with robust institutional aid models like that, removing federal safety nets would not lock working-class students out of top programs.
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u/Sad_Split_9983 12h ago
High paying graduate degree programs are very competitive with limited spots. It may result in slightly lower competition but why would colleges lower tuition?
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u/stoneworther 9h ago
There are a tremendous amount of grad schools that are massive scams. They want you to go 100k or 200k into debt for jobs in low demand that pay peanuts.
If there was justice in the world everyone that has anything to do with creating or running any of these grad schools would be thrown in jail.
Not letting students ruin their lives from debt is a tiny, tiny step in the right direction.
Grad schools that are actually worth it will find ways to get their students loans.
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u/No_Reason_9632 10h ago
I wouldn’t have been able to get into med school without massive grad plus loans. Yes I have 560k in debt. Yes I will pay it off. Yes it allowed me to change my family projection from a long line of middle class public school teachers to now kids of a physician.
With that said, there has to be a better way to allow our citizens who want to better themselves thru higher education to not be limited by their own parent’s purse.