New lifetime student loan cap: What borrowers (and expats) need to know
A significant change to the US federal student loan system has arrived. As part of the 2025 tax and spending overhaul, a lifetime borrowing limit of $257,000 has been introduced for federal student loans.
This marks the first time a true lifetime cap has been imposed, affecting graduate students, parent borrowers, and professionals across many fields.
This new rule fundamentally alters how higher education is financed – and it’s particularly important for expats who may be repaying loans from abroad or planning further education.
A quick explainer: lifetime vs. aggregate loan limits
What was the system before?
Previously, student loans were governed by aggregate borrowing limits, which allowed borrowers to regain eligibility by paying down their existing balances.
For example, an undergraduate with a $57,500 cap could become eligible to borrow again if they paid down their loan balance.
This flexibility was especially helpful for those who returned to school, pursued new degrees, or paused and resumed education.
What changed with the new law?
The new lifetime borrowing cap – set at $257,000 – works differently. It counts all federal loan dollars ever borrowed, regardless of whether they’ve been repaid.
Once a borrower hits the cap, they are permanently ineligible for further federal student loans, even if they pay the balance down to zero.
This rule mimics what some private lenders already practice – but it’s now standard for federal programs.
Who will this impact most?
Graduate and professional students
Graduate students will face tighter annual and lifetime limits:
- Graduate programs: Capped at $100,000 lifetime, with $20,500 max per year.
- Professional programs (e.g., medical or law): Capped at $200,000 lifetime, with up to $50,000 per year.
This poses a challenge, especially for those attending high-cost institutions or planning multiple degrees. Some programs – especially in medicine – exceed these totals, meaning private loans may become necessary.
Parent PLUS loan borrowers
Parents can now borrow only up to $65,000 per child through the Parent PLUS loan program. Previously, they could borrow up to the full cost of attendance, often leading to heavy debt loads for middle- and lower-income families.
This cap will require more financial planning and may limit options for families with multiple college-bound children.
Why the shift matters
The new lifetime cap aims to curb escalating tuition costs and reduce taxpayer exposure.
However, it also introduces significant financial constraints.
Key implications:
- No more re-borrowing after repayment – even if loans are fully paid off.
- Graduate and professional paths may be limited, especially in high-cost programs.
- Parents must budget more carefully as federal aid becomes more limited.
What about US expats?
If you’re living abroad, here’s how this change might affect you:
- Loan caps follow you overseas: Even if you live and work abroad, your total lifetime federal loan eligibility is still capped.
- Income-based repayment may consider foreign income: US tax obligations and income declarations (even foreign-earned) can affect how much you pay under income-driven plans.
- Strategic timing is crucial: If you’re planning to return to school from abroad, calculate how much eligibility you have left now to avoid surprises later.
What you should do now
- Check your total lifetime federal loan balance to see how close you are to the cap.
- Adjust future education plans based on what federal aid you may (or may not) still qualify for.
- Explore alternatives such as scholarships, employer tuition assistance, or private loans (while being aware of their stricter terms).
- Plan with care, especially if you’re an expat balancing international living with US-based education plans.
Final thoughts
This change marks a shift in how the US supports education financing. The lifetime loan cap brings more predictability but limits flexibility, especially for those who plan to pursue advanced degrees, return to school later, or support their children’s education through federal loans.
For US expats, it's especially important to be proactive – your global life adds layers to both your tax situation and your student loan obligations.
Knowing your limits now can prevent costly missteps later.
