Episode Overview

Podcast: The Indicator from Planet Money (NPR)
Episode Title: Will new loan limits lower the cost of grad school?
Date: December 16, 2025
Hosts: Darian Woods & Waylon Wong

This episode explores the recent elimination of federal Grad PLUS loans for most graduate students under the “One Big Beautiful Bill” Act. The hosts break down how decades of unlimited graduate lending drove up student debt and may have contributed to rising tuition, and discuss whether new, lower federal loan limits might lower the cost of graduate school or have unintended consequences for students and the labor market.

Key Discussion Points and Insights

Current Labor Market Context

• Jobs update: The US added 64,000 jobs in November; the unemployment rate rose to 4.6% due to delayed data from a government shutdown. (01:21–01:55)
• Healthcare Labor: Healthcare saw job growth, but new federal loan changes could shrink the pipeline of many healthcare workers. (01:55–02:02, 02:02–02:26)

Background: Grad PLUS Loans and Their Impact

Unlimited Lending and Tuition Inflation

• What was Grad PLUS?

  • Federal loan program established under Bush allowing graduate students to borrow up to the full cost of attendance—including tuition, books, living expenses, and childcare—with no set borrowing limit. (03:48–04:02)

• Tuition and Debt Concerns:

  • Preston Cooper (American Enterprise Institute):

    “Colleges took a look at these unlimited student loans that were available and said, hey, we could actually kind of use this as a cash cow... The result is that the graduate portion of the student debt portfolio really grew.” (04:22–04:41)

• Bennett Hypothesis:

  • The idea that boosting federal student aid encourages schools to hike prices. (04:41–04:54)

Research Findings

• Leslie Turner (University of Chicago):
  • Studied whether Grad PLUS loans caused tuition inflation.
  • Finding:

    "For every dollar increase in average federal borrowing, sticker prices went up by about a dollar." (05:40–06:02)

    • Even when schools gave grant aid, net price still increased 60–65 cents per dollar extra borrowed.
  • Research was unexpectedly timely given the policy change. (05:07–05:30)

Policy Change: Elimination of Grad PLUS

Rationale for Change

• Trump-era Law: The new Act eliminated Grad PLUS for new borrowers, aiming to restrain tuition inflation and limit graduate debt. (04:02–04:21)
• Will tuition fall?
  • Department of Education: Anticipates tuition cuts as schools adjust to students’ reduced borrowing power. (06:15–06:27)
  • Preston Cooper: Notes some early movement, e.g., Santa Clara Law School, which lowered costs via new scholarships in response to the policy.

    “Early signs of tuition cuts are encouraging.” (06:41–06:46)

  • Leslie Turner is skeptical:

    “It’s quite rare to see price decreases in sort of nominal dollar terms. If there is an effect... it will be an effect that shows up over time as programs increase their prices by less.” (06:56–07:15)

Unintended Consequences and Equity Issues

• Private Lending: Students may be pushed toward private loans lacking federal protections (e.g. forgiveness for public service, income-driven repayment).
  (07:15–07:30)

• Aissa Kanchola Banias (Protect Borrowers):

  "Federal loans come with an array of protections and benefits that are just non existent within the private student loan market." (07:30–07:51)

  • Eliminating Grad PLUS especially affects low-income, first-generation, and Black and brown students, possibly widening inequity. (07:51–08:04)

• Workforce Diversity Concern:

  • Black women: Need a master's degree to outearn white men with only associate’s degrees. Loans are crucial for access. (07:51–08:04; 08:04–08:32)
  • However, Turner's research didn't show Grad PLUS had a measurable effect on underrepresented students’ access. Barriers extend beyond loans. (08:32–08:45)

New System: Loan Limits & "Professional" Caps

• New Loan Caps:

  • Most graduate students: Lifetime federal loan limit drops from $139,000 to $100,000.
  • "Professional" programs (medicine, dentistry, pharmacy, law): Cap is $200,000. (09:03–09:20)
  • Only 11 programs get this higher cap; most health fields (nursing, dental hygiene, etc.) do not, causing “uproar.” (09:20–09:33)

• Professional Designation:

  • Preston Cooper (AEI):

    “This is simply a technical term... my degree, which is a PhD in economics, is not professional... I still consider myself a professional.” (09:33–09:54)

  • Dispute is more than semantics:
    American Medical Association warns new $200k limit may still be too low, deterring potential doctors due to costs above that figure. (09:54–10:19)

• Rulemaking Ongoing:

  • Department of Education will seek public feedback before finalizing rules. (10:19–10:40)

Notable Quotes & Timestamps

• Preston Cooper:

  “Colleges took a look at these unlimited student loans that were available and said, hey, we could actually kind of use this as a cash cow...” (04:22)

• Leslie Turner:

  "For every dollar increase in average federal borrowing, sticker prices went up by about a dollar." (06:00)
  “It’s quite rare to see price decreases in sort of nominal dollar terms.” (06:56)

• Aissa Kanchola Banias:

  "Federal loans come with an array of protections and benefits that are just non existent within the private student loan market." (07:30)

• Preston Cooper (on professional status):

  “My degree, which is a PhD in economics, is not professional... I still consider myself a professional.” (09:33)

Segment Timestamps

• Labor market update: 01:21–01:55
• Intro to Grad PLUS elimination: 02:02–03:48
• History and impact of unlimited lending: 03:48–04:41
• The Bennett Hypothesis explained: 04:41–04:54
• Research findings on tuition inflation: 05:07–06:15
• Will tuition drop? Arguments and skepticism: 06:15–07:15
• Equity/Access and unintended consequences: 07:15–08:45
• How new loan caps work, resisted by some fields: 09:03–10:19
• Next steps in rulemaking: 10:19–10:40

Tone and Style

Hosts balance economic clarity with accessibility, blending concise explanations, expert interviews, and a touch of wry self-awareness (“I still consider myself a professional!”). Experts provide nuanced analysis of both intended and potential side effects of rapid policy change.

Summary

This episode investigates whether capping federal graduate loans will lower tuition or instead drive students toward high-risk private loans and worsen access for disadvantaged groups. It presents evidence that aggressive lending did increase tuition, but guests are skeptical that schools will now lower sticker prices. The conversation closes with questions about who is left out by new loan caps, especially in high-cost health fields, as federal policymakers consider public input on the final shape of graduate lending in the US.