Today, Arnold Ventures released a new policy brief that examines how Grad PLUS loans are fueling unaffordable debt for students and why common-sense reforms are needed to protect them.
Unlike undergraduate student loans, Grad PLUS loans allow unlimited borrowing up to the full cost of attendance, which is determined by the institution. The price of graduate programs is directly influenced by the uncapped nature of Grad PLUS: Research has shown Grad PLUS’s unlimited loan program has increased the cost of graduate programs, without increasing access or value.
With growing graduate school enrollment and rising costs, the spending on these graduate loans has led to substantially higher debt levels for graduate borrowers. Graduate loans will soon account for nearly half of all federal loan dollars, yet many programs fail to offer a return that justifies the cost.
Addressing Growing Costs of Higher Education
Students are often left burdened by sky-high debt, and many are not able to graduate at all, with outstanding student loan debt at $1.7 trillion.
The good news: Congress can address this problem while still ensuring opportunity for students to access a graduate program of their choice. Multiple proposals in Congress cap or eliminate the Grad PLUS program, such as the College Cost Reduction Act from Rep. Virginia Foxx (R‑NC) and the Graduate Opportunity and Affordable Loans Act from Sens. Bill Cassidy (R‑LA) and Tommy Tuberville (R‑AL). Policymakers should set a limit on Grad PLUS loans that account for varied earnings across fields of study. This would preserve broad access to high-return professional fields while limiting borrowing to amounts that students can realistically repay.
According to estimates from the Congressional Budget Office, reforming Grad PLUS loans could save Congress $40 billion over the next 10 years. In addition to protecting borrowers, limiting Grad PLUS loans is one of 20 proposals we outlined for Congress to take meaningful steps to rein in the debt while advancing pro-growth tax reform.
