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Nearly 20 years after Congress created the Graduate PLUS loan program, federal policy discussions are underway to consider potential implications of setting caps on graduate lending—potentially through the budget reconciliation process. To inform these discussions, TICAS examined available data, foregrounding considerations of potential impact on borrowers of color and students with low incomes. Findings detailed in this memo include:
- Students of color, and in particular Black students, are more likely to borrow and to borrow more for graduate education. Based on available data, Black graduate students may be at greater risk of negative impact from Grad PLUS borrowing limits.
- Among professional degree programs, only medicine has more than 100 programs with average debt exceeding the College Cost Reduction Act’s $150,000 limit. Because of persistently high levels of racial wealth inequality, however, changes to graduate borrowing and potential caps on borrowing levels for graduate and professional education risk closing doors of opportunity to higher paying professional fields.
- Limiting graduate borrowing to a pre-set cap may encourage institutions to reduce or freeze pricing but may also restrict capital available to low-wealth students pursuing high-paying fields.
- Data limitations necessitate strong caution in policymakers’ ability to predict outcomes of large-scale reform to graduate and professional school financial aid programs.
