Changes in Higher Education: The Impact of the Big Beautiful Building Law

The recently enacted “Big Beautiful Building” law is shaking up the higher education landscape significantly. Perhaps one of its most notable impacts is the elimination of the lesser-known Graduate Plus loan program for grad students.

This new legislation has also rolled back several policies from the Biden administration, including some costly regulations and a plan for Save Student Loan repayments. Alongside these changes, it has introduced a minimal accountability framework, expanded Pell grant access, increased taxes on university funds, and established a new student loan repayment system.

However, the real standout of these reforms is the abolition of the Graduate Plus program.

Graduate Plus loans were designed for students pursuing master’s, doctoral, or professional degrees. Yet, the program turned out to be problematic, essentially becoming a cash cow for universities while leaving students and taxpayers in challenging positions.

The program was detrimental to students for a couple of reasons. First, universities believed that these loans would ease financial burdens for low-income students, prompting many to hike tuition fees. Studies suggest that Graduate Plus loans were often favored by universities, leading to inflated program costs. A recent report showed that for every dollar loaned under this program, universities raised tuition by an equivalent amount.

Additionally, Graduate Plus loans lacked borrowing limits. Unlike other student loan programs that cap annual and total amounts—like $7,500 per year for undergraduates—Graduate Plus loans were only capped by what the university chose to charge.

This led to substantial debt for many graduate students. In 2022, PhD recipients borrowed amounts that equated to 111% to 164% of their annual incomes upon graduation. Master’s degree holders weren’t in a much better situation, facing debts equal to about 68% of their yearly earnings.

For those with bachelor’s degrees, the debt burden was comparatively lower at around 56% of their annual income when Graduate Plus loans were unavailable.

Taxpayers also felt the sting of the Graduate Plus program. Ironically, it was initially created with the belief that it would generate revenue for the government to finance other projects. Unfortunately, that expectation failed to materialize. Latest estimates indicate that taxpayers have been losing around 24 cents for every dollar loaned under Graduate Plus. With approximately $200 billion in loans issued over the past decade, the elimination of this program could save taxpayers about $50 billion.

It’s worth mentioning that graduate students won’t be left without loan options. They can still utilize standard student loan programs that allow borrowing of up to $20,500 per year and a total of $100,000. For those in specialized fields like law or medicine, the amounts increase to $50,000 per year with a cumulative cap of $200,000.

Ultimately, Graduate Plus primarily benefited universities, allowing them to navigate funding challenges while leaving students and taxpayers to foot the bill. Unsurprisingly, colleges are expressing concern over losing this funding source. Yet, the broader public might breathe a sigh of relief at the program’s discontinuation.