Grad PLUS Ends July 1: Are You Ready?

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0:00:12.4 Speaker 1: Hello and welcome to Office Hours with EAB. Today, we’re digging into the harsh new funding realities facing graduate students this summer. With Grad PLUS loans going away and a new, narrower definition of what qualifies as a, “professional degree, graduate enrollment leaders are, or at least should be, scrambling to adapt.” Our experts share advice for graduate schools on what to expect and how to prepare. So give these folks a listen and enjoy.

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0:00:46.5 Brett Schraeder: All right. Hi, everybody. Welcome to Office Hours with EAB. Today, we’re back again talking about one of the bigger shifts, the most consequential shifts in graduate education financing, the end of the Grad PLUS loans and the limitations placed now on Direct Loans. So we know that for a long time, Grad PLUS has really been one of the bulwarks of allowing students to finance their graduate education. And now that that’s going away and Direct Loans are severely limited, we’ve been spending a lot of time here at EAB just thinking about what this means for our graduate partners, who’s most at risk, how should our leaders be thinking about those things, and just in general, what do we see as what’s gonna happen in the market over the next several years. So today, joined again with me, joining me is Amy Luitjens, who’s the Managing Director on our Adult and Graduate Education team. And I’m Brett Schraeder. I lead the Financial Aid and Pricing team here at EAB. So happy to have you back, Amy.

0:02:00.5 Amy Luitjens: Great. Thanks, Brett. I’m excited to talk with folks today.

0:02:04.3 Brett Schraeder: So just starting at kind of a high level, maybe give the 30-second, like, what is happening and what have you maybe been hearing in the market over the last couple of months?

0:02:17.3 Amy Luitjens: Sure. Well, since we’ve spoken with folks last, I think the last time we had the opportunity to chat about this, we were just reaching a moment in time where the market was learning more broadly about what the impacts of shifts to graduate student loans this year will be. And we were kind of reflecting on that, so folks are welcome to go back and kind of review that if that’s of interest. Fast-forward to now, just to catch anyone up who has not been following this as closely, through the course of the last year, we’ve been working through some rulemaking, the federal government around the One Big Beautiful Bill Act that, as part of the large omnibus bill, has provisions for changes with respect to graduate student loans. And what that means in practical terms, both for schools and for institutions, is that, one, historically, we have had access as institutions and students to Graduate PLUS loans which enable students to take on additional federally supported lending to support graduate and professional education up to a certain threshold every year over the course of the time that they’re enrolled in their graduate and professional education.

0:03:27.9 Amy Luitjens: Those loans are going away as of July 1. The federal rulemaking process has concluded. So we know that not only is that financial resource gonna no longer exist at that point in time for new students, but then, two, there have also been some changes to a secondary and very important funding source, which is federal Direct Loans, which also enable graduate and professional school students to provide support for their education. The structure and access for those loans has shifted, meaning that graduate and professional students. One, are subject to new definitions of professional, as many of you on the line know, that are more narrow than has historically been the case for the purpose of loan dispersal. And then at the same time, what that means is that depending upon whether or not a graduate student is in a program that is defined as professional in this case, they would receive less or more funding access as a result. So big picture, there will be less federally supported lending available to graduate and professional school students who are new as of July 1, and even less so for students who do not fall into a much more narrower subset of professional school programs using the federal definition as of July 1 as well.

0:04:50.5 Amy Luitjens: What that means for institutions and for students, obviously, is that the funding structure will change quite a bit. And particularly for institutions that fall above in terms of their tuition and cost of attendance, the costs that would have previously been covered by both sources, both Direct Loans and Grad PLUS loans, will be in a situation, as will their enrolling students, where they will likely have to either rethink pricing and scholarshiping and or students will have to seek out alternative funding if they choose to enroll. So those are the two key things I would say that we’re thinking a lot about right now with the partners that we serve, and then by extension, the students that those partners serve, helping them think through strategies and then also making sure that we’re communicating with students about their options.

0:05:37.2 Brett Schraeder: Thanks, Amy. And so I think my understanding and sense of this, one of the things is the limited definition of professional programs. So things like nursing and accounting and education are not considered for the purposes of the loans professional programs, even though I think they got 65,000 negative comments on programs like that, that those are actually professional programs. So what do you think, or how are higher ed leaders, grad deans, grad enrollment leaders, how are they thinking about this? Are they understanding the magnitude of this? Are we in kind of a wait-and-see moment? What’s your take on that?

0:06:24.3 Amy Luitjens: Yeah, I think that’s a really important question and I think kind of first of all going back to your point about the definition of professional as it relates to program type under these new provisions is an important moment in time to take a pause in this conversation I think because it has been something that has caught some attention as some of us know in the news and on social media. And I think it’s really important to be clear that for the purposes of this conversation and the purposes of the federal government definitions, the government is really thinking about, as you said, professional programs as very narrowly defined. Now, as all of us would likely say, and the institutional leaders I’m talking with and you’re talking with every day would say, is it’s not so much that we don’t think for instance nursing isn’t a profession or it is not a professional program writ large…

0:07:19.4 Amy Luitjens: It’s that for the purpose of this designation, the federal designation is very slim relative to all the programs that might exist. Right? So just for folks on the line who may not be quite as familiar with it, when we think about what is defined as professional in this context and thereby results in students having more access to dollars, it is degree programs such as MD, DO, dentistry, pharmacy, et cetera. What is not included that institutions are talking a lot about, to answer your question, and I think the broader market and students are starting to talk about is programs that do lead to professions such as nursing, OT, PT, MBA programs. Those are not included in that professional designation. So to answer your question, the first part of it, which is kind of how are institutional leaders thinking about this? Are they catching on? What are they doing about it?

0:08:13.1 Amy Luitjens: I would say that we are seeing, in my experience, and Brett, I would love your thoughts on this too, because we’re both having these conversations all the time. I would say the institutional leaders I’m speaking with across the cabinet at the dean level, program director level, are of course aware of what’s coming, but I think in terms of what they are planning to do about it, there is a very broad spectrum still of what the institutional response will be. And I think there’s a lot of reasons for that. I think that, first of all, for some institutions, there is a sentiment that this change will not really impact them, perhaps because their tuition and cost of attendance is below the threshold even for the new direct loan definitions. So they’re not worried students will be able to not access the type of dollars that they might need. And or they have a lot of part-time programs.

0:09:02.5 Amy Luitjens: So many of their students perhaps aren’t taking out Grad PLUS loans as much or even Direct Loans to the greater degree. They may not even qualify because they’re not taking enough credits every term. And so for those institutions, my sense is that there is not as much concern right now. When we get into sort of the programs where perhaps students have historically taken out some loans or they are close to the threshold of the borrowing limits that are going to start as of July 1, those institutions, in my experience, tend to be a little bit more concerned. They know that students are very price sensitive and are becoming increasingly price sensitive very quickly. And so there’s a lot of discussion about what they might do, but historically, because graduate and professional programs, for the most part, with some exception, have not offered scholarship programs or have not offered alternative pricing models.

0:09:54.3 Amy Luitjens: It’s a new moment in time with a lot of things happening at once and a lot of need to understand what’s happened historically to inform new strategies. And I think a lot of the schools I talk to are sort of in the murky middle right now of trying to decide how to address that quickly before July 1 hits. There are some institutions I’m speaking with that are approaching this with a lot of sophistication and thought in terms of if they want to further develop a scholarship program they offer, if they are working with alternative lending providers and things like that. I would characterize that subset of the overall grouping to be on the smaller side, which says to me that there’s still quite a bit of activity for institutions to manage through over the next several months as we head into the time when this will go into place. Brett, what’s your experience and what are you hearing?

0:10:47.1 Brett Schraeder: Yeah, I think those are great comments. I would second those things. And I think for some partners, as you delve into their past history data on PLUS loan activity and those things, for some, maybe the PLUS loan activity only impacts 10 or 20% of their pool. But where I sometimes see the lack of connection and sort of sophistication is if a partner all of a sudden loses 10 or 20% of their enrollment because the pool doesn’t come together and they don’t have the financing, is that going to be a problem? And usually the answer is yes, that is going to be a problem. And so I wonder, we’re in a kind of a difficult position because I think, like you indicated, bills are going to go out in June and July and early August for the fall programs. And I think there’s a lot of schools out there, some that are very sophisticated and thinking hard about this, and some, many, that are kind of like, “Well, maybe once we see what happens, then we can pivot.” And so I wonder if it’s a pivot not so much for fall ’26, but for spring ’27 or fall ’27. And so,

0:12:06.6 Brett Schraeder: And so, which I think, unfortunately, puts some of those schools a little bit behind the curve. But I do wonder, some of the ways you and I have been really thinking with partners about how do you iterate on a pricing and aid strategy over several terms? Because I do think my sense from reading the tea leaves is this will continue to be an issue. I think Congress may take it up again in a year and say, “Hey, now we’re gonna expand the list of professional programs or slightly change the rules a little bit.” And so help me think about, you really work with partners on how they build a funnel and then how they communicate with students. What’s like a two or three year sort of iteration toward this? Because there’s this potential drop-off this fall, but then you’re quickly gonna have to pivot and say, “Okay, what are we gonna do for the next term?”

0:13:04.2 Amy Luitjens: I think that’s a really great question, if not, in my mind, the question right now, if I were sitting in seat on campus trying to puzzle through this with folks like us and my colleagues on the cabinet and my enrollment team. I think that a couple of things. What I would say is, as many of you know and Brett, you certainly know, the graduate and professional school enrollment curve has been volatile, to say the least, over the last three or four years. There have been many reasons for that. We saw enrollment behavior shift each year of COVID for different reasons, both for domestic students and international students. Prior to that, we had seen institutions start to invest in much higher cost-to-deliver programs that made a lot of sense in terms of outcomes, like health professions, STEM, et cetera, but of course, that changes the financial picture for the institution.

0:13:52.9 Amy Luitjens: So when you bake all of that together, your question about how do we forecast, I think makes things a little tricky because we don’t quite know what all of the inputs are. Graduate and professional education were in a state of relative stasis, I say relative, kind of leading up until about five, six years ago. We had a relative sense, even with the last recession, of sort of what student demand would look like, how students would behave, what they would make decisions around, what their price sensitivity was, and we could proceed accordingly. We made shifts in modality, we made shifts in program offerings to be sure, but there was not sort of the up and down that we’ve seen over the last couple of years. And so as we head into the next couple of years with introducing the uncertainty of Grad PLUS changes and the direct loan changes, to your question.

0:14:44.3 Amy Luitjens: I think that while we don’t know every input we’re going to see over the next couple of years, I think that it’s really important for institutions to know that demand has changed, to know that students are searching for programs more stealthily than ever. We’re doing everything we can on our end to de-stealth those students in order to deliver them the best information about the schools they’re looking at, but it’s hard. And at the same time, we also know that, of course, the economy and the labor market are changing pretty dramatically, pretty rapidly as well for many reasons. And so with all of those things together, as an institution, I think it’s not enough to just say, one, what are we communicating right now about Grad PLUS and pricing and scholarshiping? And we need a strategy for that. But it’s also about, to your question, over the next couple of years, how are we closely studying our local and regional labor market?

0:15:37.1 Amy Luitjens: How are we closely studying what outcomes students need so that as we are creating programs or we are deepening and working to sustain programs, they are aligning both with what students are looking for and employers are looking for, but then also outcomes that are going to be really measurable? Because I think there are a number of things that have to happen. Institutions have to, one, really think about if pricing and any scholarshiping they might offer right now will help reach their enrollment goals, and that’s something you and I obviously are talking with institutions about all the time. I think number two, there needs to be an even more direct line that’s clear to prospective students as we build funnels around the offerings that exist in a program and if they meet students where they are, both from a pricing perspective but from a content and outcome perspective. And then…

0:16:27.1 Amy Luitjens: And then continuing to strive to make sure that those programs are going to equip students with an education and outcome that is in line with the investment they might make, knowing that they might not be able to access as much funding as they have historically. Schools also probably increasingly are going to have to look at ways to be more creative with employer partnerships and if there’s cost sharing that we can do. We’re talking to a number of institutions, you and I, about that, of course. And I think the other thing too, and which is great for communities and it’s great for the labor market, I think the other thing too is schools, many since COVID in particular, were already moving towards hybrid and online modalities and part-time modalities. I think we’re going to see probably even more of that, and it makes a lot of sense in this change in pricing as well.

0:17:08.7 Amy Luitjens: So a lot of changes, which is a lot for institutions to work through, but I also think that that enables institutions to align better with the needs of both students and then also kind of funding availability and ultimately what employers are looking for as well. So long answer, but I think there’s a lot of factors that institutions have to think through right now for the short term and the longer term.

0:17:31.7 Brett Schraeder: Makes sense. Yeah, that’s a helpful, helpful frame. There’s lots for them to think about.

0:17:37.3 Amy Luitjens: Brett, I know that I just mentioned a whole host of things that institutions should be thinking about right now, and I can appreciate how that likely feels overwhelming for a number of them. And I think it’s sometimes difficult in those situations to know where to start. And one of the things that I think you and I have talked a lot about, and I know we’ve had conversations with institutional leaders we talk about, is understanding what they have experienced from student enrollment around aid in the past and how that helps us think about the future and kind of identifying what sort of risk they might have as an institution and what to do about it from a strategic perspective. Can you share a little bit about kind of from your lens what you’re seeing and how you’re thinking about helping institutions on that front right now?

0:18:23.5 Brett Schraeder: Yeah, it’s a good question. I think there’s probably a couple buckets to think about it. So one is understanding what the historic basically loan uptake has been for a particular program, right? So one of the things we’re helping colleges and universities on and deans of graduate schools is just understanding, what has been your direct loan uptake? What has been your PLUS loan uptake? And who, if your classes in the future look similar to your classes in the past, who might be at risk? So do you have certain academic levels of students that might be at risk? Do you have, if you have like a 4+1 or a 3+2 program, are those students more at risk than students coming from, say, employers? And so what we’re helping partners with, we have some access to some third-party data that’s proprietary, and it gives us a range of potential credit risk that a student is.

0:19:29.1 Brett Schraeder: And so we’re using that to assess whether a student could access private markets for student loans if they don’t have access to a PLUS loan anymore and identifying which students might be most in need of those and then helping colleges think about the future of that. So we’ll get back to the future. What does the future look like? But a starting point is just understanding like, hey, in the last few years, 30% of our pool has taken advantage of Graduate PLUS loans, and the new lending limits won’t cover that. And so just understanding, is that 10%? Is that 20%? Is that 40% of your students? Just to get you a sense of like, okay, what do we need to plan for in the future? The other bucket is schools. Some schools offer scholarships or aid now. Many do not. And so one of the things that I know we’ve seen in our student surveys over the years is that students are expecting graduate programs more to provide scholarships and less of their own out-of-pocket.

0:20:31.8 Brett Schraeder: And so we do have some schools that have stepped into that. There was an article today that, Amy, you and I shared about MBA programs just saying, “Hey, 50% discount on our MBA.” Not sure that’s 100% the best strategy, but it’s a strategy. So the other piece we’ve been talking to schools about is if you’ve had a scholarship program in the past, how has it worked for you? And assessing whether that’s gonna work in the future. And then if you haven’t had a scholarship program, how do you stand one up without just shooting in the dark? So without doing the, “Hey, let’s just give a 50% discount to everybody,” there’s probably a more strategic approach. And so walking partners through what that strategic approach looks like. So those are the things we’ve been really talking about in the past. Pivoting over to communication, and I’d love to hear your thoughts on this, Amy…

0:21:27.1 Brett Schraeder: But the one thing that if I go back to the loan and credit risk side of things, what we’re trying to help partners do now is look at the students that are committed to them, that have deposited or that have been admitted, that might need an additional loan over the direct loan, and then understanding their credit risk, and then just getting out to those students to talk them through what their options are. We know that some students may have other options. They may have family options. They may have other things. But better to have that conversation in May and June than when bills go out in July. But what’s your sense of that?

0:22:06.3 Amy Luitjens: My sense of it is I think it’s always hard for anybody to deliver difficult news. And I think that for many institutions, this is potentially difficult news to share with their students. And like we said earlier, for many very understandable reasons, a lot of institutions just aren’t at a place where they know for sure how they’re going to handle it. And so with all of that uncertainty, I think it makes it challenging to think about, “Well, I don’t have the full picture. I’m not quite sure. I don’t have enough resources to share. I’m not sure how I’m going to think about resources. So I’m not quite sure what to tell students.” And I think that is human nature and very understandable because institutions want to serve their students so deeply. And I would say, and am saying in conversations we’re having with the many partners we serve, something is better than nothing right now. So to your point, I think a couple things.

0:23:01.8 Amy Luitjens: First of all, I think that whether or not we’re fully prepared for it, the reality is that as of July 1, new graduate and professional students will no longer have access to Graduate PLUS loans. That is not going to change. I know for a while folks were hoping it might. It won’t. And so I think at a minimum… And we also know that the definitions and thresholds for Direct Loans are now a settled rule, settled law. So with both of those things in mind, while we may not have all answers about future pricing or future scholarshiping, to your point, what I think we need to do as institutions is let our students know that these changes are coming, as uncomfortable as that may feel. And at the same time, prepare internal staff, who likely are very much on top of this, to begin to be a resource to answer questions about what we do know, which is to say at each institution…

0:23:52.6 Amy Luitjens: Number one, what is our level of familiarity with these changes and can we speak to them in an FAQ that is both available for our internal teams and then for students? Number two, to your point, what additional resources are we aware of, both institutional and non-institutional? Meaning, if we have had a scholarship program, we have a new scholarship program, we have discounts, we have employee relationships where students get a better price because of an affinity that we have with… Or because of a relationship, rather, that we have with that employer or that organization. Let’s be sure we are explicit about that. It’s front-loaded, it’s available to see on the website or in an email or, like I said, in an FAQ, and let’s talk about that and let’s be proud of it. If there are ways for students to think about paying for their education in different ways, meaning perhaps they were enrolled in a full-time program…

0:24:43.2 Amy Luitjens: But there’s a possibility that that may not work for them anymore because of the lack of availability of loans. Do we have alternative methods of enrollment, whether it is a part-time option, which would take longer but cost less over time? Do we have alternative ways in which students can fund their education over the year through payment plans, things like that? Those are the sorts of things that you’d want to be really clear about with your student and potentially explore. I think that it’s perfectly fair to say as these things change, we as an institution will let you know if additional funding comes available. So if you’re on the path to it, but you’re not all the way there yet and you’re acting in good faith, I think it’s perfectly fine, fair, and great to say that to students. But you really need to have a plan to equip your internal team and equip students, even if you don’t know everything.

0:25:34.5 Amy Luitjens: And like you said, Brett, I think now is always better than later in this particular case, because the reality is there’s going to be a number of students come summer who are not aware of this. And they perhaps might have expected a bigger package just because historically these loan dollars have been available both at the undergraduate level in different ways and then at the graduate level. And I suspect, and I know we’ve talked about this, there are probably a lot of students making a lot of assumptions about how they’ll be able to fund their education. And when they find out that those options are not available, I suspect we will see over the course of the summer and into the early fall some real challenges around yield. So the sooner institutions are able to get in front of students and have some of these conversations, even again, without all the answers…

0:26:17.0 Amy Luitjens: I have to believe that it will help equip students to make better decisions and help the institutions support those students. To your point, and in conclusion, I think around sort of the third-party lending options, it’s something that institutions I talk to are exploring to varying degrees, but at a minimum, and I also know there are some states that have great options too in some regions, and some of that’s even in the works right now, right? So that’s in flight. But I think that ultimately being able to point to vetted third-party resources as at least an option for students to explore, whether that’s local credit unions or national banks or bigger higher education lenders, those are things that institutions historically maybe wouldn’t have pointed to that likely make sense now for some institutions simply to ensure that students are fully aware of all the resources they might have available.

0:27:09.4 Amy Luitjens: So I don’t think there needs to be a ton of communication, but I do think that there needs to be thorough and thoughtful communication about what we can do right now to start to help students understand what their options are.

0:27:20.2 Brett Schraeder: Yeah. Those are great, great points. And we have talked a lot about how much students know about these changes, and I think both your and my sense has been they don’t know all that much. And so I think it’s incumbent on our institutions to help them. The only other thing I was thinking about, and then we can sort of have the big takeaways on what schools can do, is I was having a conversation with a colleague about, even if students can get a private loan instead of a PLUS loan, there is more friction in that process. So the PLUS loan, if you had filled out a FAFSA, getting a PLUS loan was almost no lift. It was sort of going to your FAFSA website, right, click the button, “I need money,” money was going to be there in a couple of days to the institution. Now we’re going to kick students out to a third-party site and they’re going to have to do a credit pull and they’re going to have to do this and that. So I just wonder if that’s a piece of the communication too. What do you think?

0:28:23.4 Amy Luitjens: I agree. I think that’s a great point. I think that institutions will probably find themselves in what could potentially be a slightly uncharted or even uncomfortable place in that regard because historically, broadly across the market, we haven’t seen that kind of counseling. But I think you’re exactly right. And fundamentally, higher education institutions exist to serve students and serve our communities and serve the employment market and, of course, serve the academy. And I say all that because in this particular case, I think it’s a service moment for institutions. I think that while it may not have been part and parcel of what we’ve done historically, to your point, I’m really glad you brought it up because I think it’s a really important part of saying, “Hey, we’re learning with you.” I don’t know that I would write an email saying this, but I think it is a matter of saying essentially, “We’re new to this as well, but we want to support you.

0:29:15.1 Amy Luitjens: And here’s what we know, and here’s what you should be aware of.” So if you’re going to seek out third-party support, just like you said, Brett, this is what that could look like. And we would just encourage you to be prepared as you’re considering all of these other things. You want to make sure you have enough runway. And yet again, that’s why May-June notification is really important right now, especially for institutions that start in August. You want to make sure you can pay rent. You want to make sure that you will be able to buy your books. So, I mean, I think that you’re spot on with that being part of that overarching communication series that institutions need to lean into right now.

0:29:56.9 Brett Schraeder: Yeah. Great. The same timeline doesn’t always work, right? [chuckle]

0:29:59.2 Amy Luitjens: That’s right.

0:29:59.7 Brett Schraeder: The timeline is before. So if… As we wrap up, if you were to sort of say, like, “Hey, I’m in an elevator with a dean of graduate enrollment of an institution,” what would be the two or three big headlines that you would want them to be thinking about and what might set them apart in the future if they go down that road?

0:30:25.7 Amy Luitjens: Yeah, it’s a great question. I think first and foremost, depends on how long of an elevator ride it was, but I would want to say, “Hey, what’s the level of awareness that exists at your institution and what are you doing about it?” What I want to make sure, Dean, that you are thinking about is, one, equipping your institutional staff with the information they need to understand not only what you’re doing, but what you could do in the future and what you’re considering doing to support students. And two, empowering them to be able to share that information quickly with prospective students and enrolled students so they understand what their resources are and that the institution is there to serve them ongoing. And then finally, I would say at a higher level, helping them understand that there are ways that they can kind of ride the tide, if you will.

0:31:13.8 Amy Luitjens: I think that there are a number of different mechanisms we talked about here today that they can and should be thinking about if they’re not already, whether that is understanding their historical loan use and how they can understand that in order to think about places where they might need to make adjustments now, whether that’s on pricing or scholarship. I think it’s considering what kind of program modalities, offering, and timing options they have flexibility around in order to make sure that they don’t lose students and are able to bring them through the program. And then I think finally, it’s really keeping an ear to the ground and looking at data to understand not only student demand and student behavior, but then also what the job market looks like, what outcomes look like right now, and how to pull that all together so that as we’re talking with prospective students…

0:31:58.9 Amy Luitjens: They understand not only the value proposition of the institution, but how the institution is going to help them in this time of financial change afford a degree and complete so that they can take advantage of those outcomes that the program has to offer.

0:32:13.2 Brett Schraeder: That’s great advice. It sounds a little bit like our three Ps of marketing, so we can certainly wrap with that. Great to be with you today, Amy. I think lots for us to think about with our partners. And I think probably the last piece of advice, which you hinted to throughout all of your comments, is you probably don’t want to wait. So let’s, you know, if you want to talk to us about these conversations or your colleagues, we’re more than happy to do that, and we think sooner is better. So thanks for joining, Amy.

0:32:45.5 Amy Luitjens: Yeah, thank you so much.

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