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Forbes
a few seconds ago
- Business
- Forbes
25 Grad Schools Taking A Huge Financial Hit From Trump
F or more than a decade, graduate programs have been a growth engine for the nation's universities, fueled by uncapped federal Grad Plus loans for U.S. citizens and permanent residents, a flood of tuition-paying international students, and tens of billions in federal research grants. Now, President Donald Trump, with an assist from the Republican-controlled Congress, has abruptly cut off the fuel supply and thrown that engine into reverse. A painful adjustment is just beginning. In addition to freezing research grants to specific elite institutions as a cudgel against those Trump considers too 'woke' (e.g. Harvard, Columbia, Cornell, Northwestern and UCLA), his administration has canceled an estimated $7 billion in science grants at more than 600 schools in all 50 states, sharply limited overhead payments to universities for continuing grants and proposed even deeper funding cuts for fiscal 2026 beginning on October 1. Compounding the uncertainty, a Trump executive order issued just last week requires political appointees to approve all new grants, and demands that existing awards be revised to allow an agency to terminate them at any time if priorities change. Meanwhile, the One Big Beautiful Bill Act (OBBBA) Trump signed in July cut $307 billion from the cost of federal student loans over the next decade, in part by making paying back loans more onerous. Crucially, it also shut off the Grad Plus loan spigot for those starting their studies after July 1, 2026. Whereas current grad students can borrow their full cost of attendance, including tuition, fees, books, housing and food, most new graduate students will be able to borrow a maximum of $20,500 a year directly from the government, with a lifetime limit of $100,000. Those enrolling in medical, dental, law and other professional schools will be able to borrow $50,000 a year, with a $200,000 lifetime limit. A good chunk of grad student borrowers currently exceed those new annual limits–at the extreme, 73% of dental students who took loans in 2019-2020 borrowed more than $50,000. The Grad Plus pain is still a year away. But schools are already feeling the effects of Trump's harsh and ever evolving approach to international students. New foreign enrollments could decline by 30% to 40% this coming school year, leading to an overall 15% decline in their number on U.S. campuses, estimates NAFSA: Association of International Educators. The administration temporarily paused issuing student visas while it added a screen of applicants' social media to the process; has restricted or barred new visas for residents of 19 countries; and has attempted to expel foreign students who participated in (or voiced support for) pro-Palestinian protests. The Trump Administration even tried to revoke Harvard's ability to enroll any foreign students, though a court blocked that extraordinary punishment. The table below shows 25 vulnerable large and mid-sized private schools on Forbes ' list of America's Top Colleges. Each had at least 2,000 graduate students in 2022-2023, making up 35% or more of the school's enrollment, with a quarter or more of those grad students here on foreign student visas. Back in June, Forbes highlighted 16 already financially struggling (and mostly small and little known schools) that were put at risk by Trump's overall foreign student crackdown. What's striking about this new list of 25 with graduate student vulnerability is it includes many of the nation's most prestigious institutions, including six of the eight members of the Ivy League. Moreover, 20 of the 25 earned at least an A- (and 14 an A+) on Forbes College Financial Grades 2025, based on financial metrics before Trump reoccupied the White House. These universities will survive, but face a painful adjustment, particularly since most of them have also been big recipients of federal research dollars. At the top of the list is New York City's Columbia University, whose student body in 2022-2023 was composed of 72% graduate students, with 49% of those coming from abroad. In late July, Columbia inked a deal with the Trump Administration which requires it to pay $221 million to the government and, among many other things, fork over to the feds more information on its foreign students and try (in unspecified ways) to reduce its 'financial dependence on overwhelming international student enrollment.' In return, the school says, the $1.3 billion in federal grants and other funding it relies on a year should start flowing again. A Hobson's choice. In addition to killing Grad Plus loans, OBBBA took another swipe at some of the wealthiest private universities on our list: MIT, Harvard, Princeton, Yale and Washington University in St. Louis, among others, now face sharply higher taxes on the earnings of their endowments. While most universities have yet to lay out long term restructuring plans, programs around the country are taking some immediate actions— freezing hiring, laying off workers and cutting (or suspending) new enrollment in some PhD programs that depend on grants. John Hopkins, the top university recipient of federal grants and contracts—it got $4 billion of federal funds making up 41% of its budget in 2022-2023—lost $800 million in contracts when Elon Musk and DOGE dismembered the U.S. Agency for International Development. In March, it cut 2,200 jobs, most of them abroad. In June, citing a continuing stream of additional cancelled grants, a two thirds drop since January in the award of new grants, and actions affecting foreign students and graduate student loans, it instituted a university-wide hiring freeze and halted pay raises for anyone earning more than $80,000. Northwestern, which has had $790 million in grants frozen, is eliminating 425 positions, about half of them already vacant. At Duke, another graduate education and research powerhouse, nearly 600 staff and 40 faculty have accepted voluntary separation and involuntary layoffs are now underway. 'The status quo is not an option,'' the dean of the Division of Arts & Humanities at the University of Chicago bluntly declared in an email she sent to the faculty of the 15 departments she oversees, which the school is considering consolidating into eight. According to the student newspaper, which viewed the email, she ticked off a list of reasons structural change is needed, including a higher endowment tax, changes in graduate student loans and developments affecting international students. She also cited a possibly souring economy which could lead to lower donations as a worry. B etween the 2011-2012 and 2021-2022 school years, the number of doctorates (including PhDs and law, medical and dental degrees) awarded annually grew by 20% to 203,900, while master's degrees climbed 16% to 880,200. Meanwhile, bachelor's degrees increased just 12% to 2,015,035, according to the National Center for Education Statistics. It's hard to overstate how important foreign students and unlimited Grad Plus loans have been to the graduate school boom. (While federal grants are still by far the biggest source of university research money and support many Ph.D. candidates, they actually declined as a share of universities' total research funding during that growth decade.) Congress launched the Grad Plus program in 2006, so it was in place when the Great Recession hit and the unemployment rate for young college graduates (ages 22 to 27) surged from 3.4% in December 2007 to 7.9% in December 2010. Truth is, the rate would have gone way higher if a lot of young grads hadn't decided to either hide out in graduate school, living on government loans, or to settle for non-college jobs (e.g. as baristas). 'When the economy is softer, students go back and get another degree to really separate themselves in the labor market,' observes Robert Kelchen, head of the Department of Educational Leadership and Policy Studies at the University of Tennessee, Knoxville. The weak economy and unlimited loans set off a graduate degree arms race, of sorts. With so many folks having earned advanced degrees (and particularly a master's) the bar was raised, with both employers and job hunters thinking that extra sheepskin mattered. 'In the last few years, when the economy has been fairly strong, people see graduate school as a way to really separate themselves in the labor market,'' says Kelchen. Seeing the demand and the unlimited pot of money, revenue-hungry schools rushed to launch new master's programs–some, in retrospect, of dubious value. Between the 2004-2005 school year and 2021-2022, the number of master's programs offered by private nonprofit universities nearly doubled, according to a study Kelchen coauthored. Growth wasn't even across subject areas. Master's degrees in computer, information sciences and support services; health professions; and public administration and social services climbed the most between 2011 and 2022, growing 145%, 75% and 20%, respectively. But master's of business administration, an already well established way to get ahead, rose just 7%. Not surprisingly, with no limits on graduate student borrowing, the average net cost of tuition and fees in a master's degree program (that is, the cost minus grant aid from the school), started rising faster than the net cost of undergraduate study. (The amount undergraduates can borrow from Uncle Sam has remained capped at anywhere from $5,500 to $12,500 a year, depending on undergraduate year and if the student is independent.) 'A lot of colleges have gotten themselves into a financial position where they are reliant on graduate tuition revenue as a major source of funding for them, and so that is a change in how they will need to operate and think about how they structure themselves,' says Michelle Dimino, the director of think tank Third Way's education program. Meanwhile, U.S. graduate programs, and particularly those in technology, engineering and math (STEM), came to increasingly rely on foreign students. In 2021-2022, just 16% of all U.S. master's degrees and PhDs awarded were in STEM. But international students earned 44% of their master's and 58% of their PhDs in STEM. After dipping during the pandemic, international school enrollment in U.S. graduate programs set a new all-time record in 2023-2024, when there were 502,291 foreign grad students studying in the U.S., an 8% increase from the year prior, according to data from Open Doors. By contrast, the number of foreign undergrads that year was down 1% to 342,875. One of the draws of studying here is that international graduates of U.S. universities, particularly in STEM subjects, have had an advantage when it comes to staying in the U.S. to work. In 2023-2024, a record 242,782 international students were enrolled in Optional Practical Training (OPT), a program which lets students stay to get practical work experience for a year after graduation, or for three years if they majored in STEM. But the Trump Administration seems likely to revamp immigration policies in a way that could end or limit OPT–yet another hit to the international appeal of a U.S. degree. W hat comes next? Federal research funding cuts and uncertainty are already leading schools to apply the brakes to some PhD programs, limiting or even pausing admissions of students who have traditionally been supported by grants. Duke's medical school is even hashing out a controversial plan that would cut the salaries of tenured basic science professors who had relied on lost research dollars from the National Institutes of Health. The coming end of Grad Plus is likely to affect different graduate programs very differently, but education experts expect more termination of programs than chopping of tuition. The high cost of lab equipment and faculty makes it impossible to drop prices 'overnight,' says Third Way's Dimino. 'We might see some schools who decide that the cost of a given master's degree program or graduate degree program compared to what they can bring in in revenue from it now, with these different caps, isn't worth it for them,' she adds. If prices don't come down, can students pay their bills without Grad Plus? A new analysis by Jason Cohn at the Urban Institute shows that in the 2019-2020 school year, 56% of all dental students, 41% of all medical and osteopathic students, and 20% of all law students borrowed more than the new annual limit that kicks in on July 1, 2026. That includes those students with rich parents who didn't borrow at all; of those who did borrow, 73% of dental students, 57% of medical and osteopathic students and 30% of law students borrowed more than the new $50,000 a year limit. Private lenders are likely to fill in the gap for many of those professional school students, given their high earnings prospects. Kelchen expects to see less interest in lower paying fields, like public interest law, because future students will have to focus on repaying private loans which don't–unlike the federal ones– have provisions for income based repayment and (if they're working for government or not-for-profits) possible loan forgiveness after 10 years of repayments. Similarly, in medicine, the switch to private loans could mean fewer low income students in medical school, and fewer MDs ready to go into lower-paid primary care or to serve poorer areas. Medical schools will have no trouble filling seats– less than half of students who want to become doctors get into med school now. And top law schools should have no trouble meeting their enrollment numbers. But expensive, lesser known law programs will have to consider lowering tuition, says Austen Parrish, president of the Association of American Law Schools and the dean of the University of California, Irvine School of Law. That could be tricky, he adds, since prospective students often assume cheap programs aren't as good. Parrish also expects law schools to reconsider how they allocate aid to lower-income students. As opposed to granting a small number of stellar students full-ride scholarships, some schools might spread smaller scholarships to more students to fill in the gap between the new federal borrowing limits and school costs. 'I do think every school is going to be doing some analysis as to whether there are ways they can still recruit the same high quality students by putting in more money throughout the ranks rather than as much at the very top,' he says. Graduate degrees, and particularly master's programs leading to less lucrative careers are another story. By Cohn's figuring, 46% of all master's of fine art students who borrowed exceeded the new $20,500 annual limit in 2019-2020, as did 31% of all master's of social work students who borrowed. Says Kelchen: 'The private market is not going to lend to a master's in social work because even though the social return is high, the economic return is not.' More from Forbes Forbes One More Worry For College Students: Medicaid Work Requirements By Fiona Riley Forbes These 26 Rich Private Colleges Just Got A Tax Cut From Republicans By Emma Whitford Forbes How Scrubbing Your Social Media Could Backfire–And Even Hurt Your Job Prospects By Maria Gracia Santillana Linares Forbes Facing A $57 Million Federal Tax Bill, Washington University Chancellor Worries About Other 'Existential Threats' By Emma Whitford
CNBC
07-08-2025
- Business
- CNBC
New federal student loan limits are a 'punch in the face' for aspiring doctors: American Medical Association president
A measure in President Donald Trump's "big beautiful bill" that caps federal student loans could make it harder for medical students to finance their education or force them to abandon their medical school plans, experts say. Starting next year, the legislation caps the amount of federal loans students can borrow for graduate school at $100,000 over a lifetime — and sets a lifetime loan limit of $200,000 for professional programs, such as medical, dental or law school. Grad PLUS loans will also be eliminated entirely. Those changes go into effect for new borrowers on July 1, 2026. Some experts say the new loan limits will provide a much-needed check on soaring tuition costs, which have jumped significantly in recent decades, outpacing inflation and other household expenses. Higher costs have made college and graduate school seem out of reach for some while saddling others with crippling student loan debt. More from Personal Finance:These college majors have the best job prospectsFamilies feel confident about paying for college, until tuition bills arriveStudent loan borrowers — how will the end of the SAVE plan impact you? Tell us Families, too, support having additional guardrails. Roughly two-thirds, or 67%, of parents said there should be limits on how much federal student loan debt students can take on, according to Sallie Mae's annual How America Pays for College report. However, for aspiring doctors, the limits may mean drastic changes. The average cost of medical school already exceeds $200,000. At private institutions, the average cost is more than $300,000, according to 2024 data from the Association of American Medical Colleges. "This is now a generation that has a big-time punch in the face," said Bobby Mukkamala, president of the American Medical Association. "People view medical students as future rich people and that's not the case at all," said Kylie Ruprecht, a third-year student at the University of Wisconsin School of Medicine. "You go into crazy, crazy debt to go into medicine," said Ruprecht, 24, "and then repay those loans over decades." Ruprecht relies on a combination of unsubsidized student loans and Grad PLUS loans to cover her costs. Once she graduates, she will begin a four-year residency to become an anesthesiologist. It will be years before she is on solid financial footing, she said. Ruprecht declined to say how much she will owe, in total, when she graduates. Although Ruprecht is grandfathered into the old borrowing limits, her current debt load, with Grad Plus loans, would surpass the new loan caps, she said. In fact, about 27.5% of medical school students and 60% of those in dentistry programs graduated with more debt in 2020 than is allowed under the new loan limits, according to calculations by higher education expert Mark Kantrowitz. "Medical school is the 'hair on fire' situation because the numbers are big, period, and the gaps between the federal loan limits and the program costs are sizeable," said Ken Ruggiero, co-founder and CEO of private education lender Ascent Funding. Nearly every year, students and their families are borrowing more to make up the difference. Now, around 44 million Americans owe a combined $1.7 trillion for their education. Roughly 40% of that outstanding federal student loan debt is taken on for master's and PhD programs. The new legislation "doesn't affect everyone equally," Mukkamala said — it's students from underserved communities who will be less likely to go into the medical field as the new loan limits fall short of the total cost of attendance, which is over $200,000. "If someone like that gets through college and looks at that number, they are going to say, 'no way,'" he said. According to 2024 projections by the Association of American Medical Colleges, the U.S. was already on track to have a shortage of up to 86,000 physicians by 2036. "The new annual and aggregate loan limits could create challenges for some medical students to finance their education, resulting in an additional financial barrier to attending medical school and ultimately worsening the current and projected physician shortage," said Kristen Earle, program leader for student financial aid services at the Association of American Medical Colleges. "We are concerned that this added barrier could deter qualified candidates, particularly low-income students, from pursuing a medical career altogether," Earle said. It's likely the new limits on federal student loans will spur borrowers to find other lenders to bridge the gap, Earle said. "The changing landscape does present an opportunity for private lenders." Private student loans often come into play once students have reached the federal loan limits and still need additional education financing. "The new loan limits for Parent PLUS loans and graduate/professional school loans will shift some borrowing from federal loans to private student loans," Kantrowitz also recently told CNBC. "This will particularly impact low-income students, who are less likely to qualify for private student loans." Unlike federal loans, private loans are not guaranteed. Private student loan lenders rely on a borrower's credit score to determine eligibility and interest rate. "We want to lend to people who can afford to pay us back, that's how the model works," said Ascent's Ruggiero. Private loans also come with fewer safety nets and less flexible repayment options compared with federal loans. "The idea behind [the loan limits] is great, but it's not putting the burden on the universities. It's putting the burden on students," said Ruprecht, the aspiring anesthesiologist. "It's students who will have to scramble."
Yahoo
20-06-2025
- Business
- Yahoo
How Trump's budget bill will impact student loans: What to know
US President Trump's "big, beautiful bill," which is currently being considered by the Senate after passing the House, will change the rules for current students relying on federal loans and grants as well as borrowers working to pay down their debt. Author and student loan expert Mark Kantrowitz joins Wealth to outline these changes and what student loan borrowers need to know. To watch more expert insights and analysis on the latest market action, check out more Wealth here. All week, we're giving you everything that you need to know about paying back your student loans. Today, we're breaking down all the latest policy changes under the Trump administration. Joining us now for that, we've got Mark Kantrowitz, author and student loan expert. Mark, let's start with some of the proposals in the Republican budget bill. What changes could come for borrowers if it is passed as is? Well, first of all, it repeals the subsidized Stafford Loan for undergraduate students and the Grad Plus loans for graduate students. It sets the House version of the bill sets new aggregate loan limits of $50,000 for undergraduate students, $100,000 for graduate students, and $150,000 for professional school students. The Senate version of the bill, which just dropped this morning, uh has $200,000 limit for professional school students. And it has an annual limit for the undergraduate students of for the Grad Stafford Loan of $20,500 and $50,000 for professional school students. Uh, it gets rid of uh the economic hardship deferment and unemployment deferment, and changes forbearance to nine months out of every 24 months. Uh, and it's replaces the dozen or so, uh student loan repayment plans with just two. A standard repayment plan which is more like an extended repayment plan, the repayment term depends on the amount you owe. Uh, and an income-based repayment assistance plan, which is an income-driven repayment plan that uh has monthly payments that are slightly less than the current income based repayment, but much higher than under the save repayment plan which has been blocked by the courts. And so as we're trying to think about some of the largest changes for, for what this means long, what this means longer term, are students going to end up having a more difficult time getting student loans, not just applied for, but also getting those disbursements as well. What, what's the net effect? Well, the net effect is that uh, students at higher cost colleges that need to borrow more are going to have to borrow from the private student loan programs, uh, not just from the federal student loan programs. So, about 7% of undergraduate students, up to a little bit more than half of medical school students will have to borrow private loans because federal loan limits will not be enough. Um, the grants are also going down, which may shift uh, some students from getting grants into borrowing or not going to college at all. The House bill uh, eliminates Pell Grant eligibility for students who are enrolled less than halftime. Um, and that's going to disproportionately affect students at community colleges. It also changes the definition of full-time from 12 credits a semester to 15 credits a semester, which is the equivalent of about a 20% cut in the Pell grants that the students who were previously enrolled in 12 credits will receive. That means they're going to have to borrow, or not go to college at all. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
The Guardian
01-06-2025
- Business
- The Guardian
Loan plan in Republican bill could worsen doctor shortage, experts warn
Doctors' associations, medical schools and student advocates warn that a proposal in the Republican-led budget bill being considered by Congress restricts graduate federal student loans and could worsen a national shortage of doctors. The new Republican proposal would limit federal student loans for 'professional programs' – such as medical school – to $150,000, eliminate a federal graduate loan program and put limits on loan forgiveness. Medical students rely heavily on federal student loans to finance lengthy and expensive educations, particularly since 2006, when Congress broadly lifted caps on borrowing limits to allow for the full cost of tuition and living expenses. 'Our organization is very concerned about this,' said Dave Bergman, a spokesperson for the American Association of Colleges of Osteopathic Medicine (AACOM). He said about four in five students who attend osteopathic medical schools, which grant the doctor of osteopathy or 'DO' designation, use Grad Plus loans and many depend on student loan forgiveness. The changes are part of the 1,100-page Republican-led reconciliation bill dubbed the One Big Beautiful Bill Act that Donald Trump sees as core to his second term in office. The legislation passed the House last week and is now being considered by the US Senate. 'When there is a stated goal from these policymakers to increase the physician workforce, to increase the number of primary care physicians and expand access in rural and underserved areas – these policies just don't align with those priorities,' said Bergman. 'It's a really bad workforce decision.' The Association of American Medical Colleges estimates the US will face a shortage of between 37,800 and 124,000 physicians by 2034, with specialties such as primary care, psychiatry and geriatrics especially affected. Advocates warn the curtailing or eliminating federal student loan programs could drive low-income students away from pursuing medicine as a career, make loans harder to repay, or push students into the arms of expensive private lenders, advocates told the Guardian. In turn, these changes could also worsen the flight of doctors from lower paid specialties, especially family medicine, primary care and pediatrics, which tend to have lower match rates than higher paid specialties such as cardiology, experts said. 'I, along with many others, worry that these changes will make medical school unaffordable, turn loan repayment into a pipe dream for residents, and worsen physician shortages – especially in primary care and underserved areas,' wrote recent medical school graduate Kaley Parchinski in a Stat editorial. An analysis by the Urban Institute, which studied the proposal when it was first introduced by Republican North Carolina representative Virginia Foxx in 2024, found the limits could affect more than 60% of students pursuing medicine and other health professions. 'At a time when our country urgently needs more doctors – especially in underserved areas – this bill would create new financial and logistical barriers that disproportionately harm low-income students,' said Dr Shannon Udovic-Constant, president of the California Medical Association, in a statement. The limits on graduate education would join limits on student loans seeking four-year degrees in a way that critics warn could make completing college more difficult for low-income students. Sara Partridge of the Center for American Progress said the changes risk 'creating or exacerbating [shortages] in essential and medical and healthcare fields, and reducing pathways to high-paying, in-demand career fields for students in underrepresented backgrounds'. The federal government has guaranteed student loans as a form of financial aid since 1965, part of a program called the Federal Family Education Loan program. These loans are a major payor for American medical schools, whose tuition costs have increased dramatically in cost since the mid-20th century, in line with other forms of higher education. Because of the long training requirements for doctors, aspiring physicians often graduate with large debt burdens, and how to decrease that burden has been a subject of bipartisan debate. The median indebtedness of a medical student who carried loans was $205,000 in 2023 according to the AAMC – or more than $50,000 short of the limit placed by congressional Republicans. House Republicans argue that uncapped student loan access has driven up the cost for expensive professional degrees, and that limiting federal loans would help drive down the cost of tuition. Dually, Republicans have argued that if students need more financing they can go to the private market. 'It is extremely costly to get a medical degree,' said Sara Robertson, spokesperson for Republicans on the House committee on education and workforce, which drove the proposal. 'Reforms in the bill will help put downward pressure on prices at medical schools so that future medical students can pay lower tuition costs, thereby making medical school more accessible to individuals from all backgrounds.' Robertson argued that, although the bill would limit how students can earn credits toward loan forgiveness during residency, it would allow them to defer interest and that private student loans would become available. 'For borrowers who do need to borrow more than the bill's loan limits, private student loans – particularly for medical students – will be widely available and often have interest rates,' said Robertson. However, because of relatively high earnings, medical students are also among some of the least likely students to default – limiting government risk. An average of 8.15% of all student loan debt is in default at any time, according to the Education Data Initiative, while just over 1% of osteopathic medical students miss loan payments, according to AACOM. Further, economists who have studied the issue – including those whose work Republicans have cited – warned there could be unintended consequences to altering these programs. 'The private loan market looks very different than it did in the years before Grad Plus,' in 2006, said Lesley Turner, an economist and associate professor at the University of Chicago Harris School of Public Policy. Turner and her co-authors wrote a paper which found that graduate loans, unlike loans for four-year degrees, likely raise the cost of graduate tuition. Robertson cited the paper to Axios. Turner said the Republican bill proposes a far lower limit for federal student loans than in 2006, the time before the Grad Plus program was created. Aggregate loan limits adjusted for inflation and for health-related programs, such as medical degrees, were 'almost $300,000 … so almost double the limit the House proposed.' 'This isn't going back to where we were in 2006, this is going back to that and then cutting it in half,' Turner said. 'It's not clear that the private student loan market would fill in that gap.' Turner's co-author, labor economist Jeff Denning at the University of Notre Dame, said he had 'mixed feelings' about the proposal. 'Uncapped borrowing is probably not a great policy,' said Denning, 'but capping it might have these unintended consequences particularly for high tuition programs including medicine.'
