Colleges Can Limit Student Loans by Major

Colleges Can Now Limit Federal Loans for Certain Programs

Starting July 1, 2026, colleges will gain expanded authority to restrict how much students can borrow in federal loans — and the rules could vary depending on a student’s major.

This change comes from Congress’s “One Big, Beautiful Bill,” which broadens the ability of schools to cap loans for specific programs of study. While schools have long been able to set lower loan limits based on cost of attendance and financial aid packages, they can now apply restrictions across entire majors if those programs have a history of lower earnings or higher default rates.

Why Colleges Might Limit Loans

Experts say this new flexibility is designed to prevent students from over-borrowing in fields where wages are historically lower. Majors in education, social services, criminal justice, liberal and performing arts, and medical technician programs often see higher rates of underemployment or lower salaries, making it harder for graduates to repay their loans.

Schools also face pressure to manage their Cohort Default Rate (CDR) — the share of graduates who default on loans within a few years of repayment. If default rates rise above federal thresholds, colleges risk losing access to federal aid programs like Pell Grants and student loans altogether.

What This Means for Students

• Borrowing power may differ by major. A student in engineering or nursing may be able to borrow more than a student in liberal arts.
• Financial planning becomes even more important. Students may need to explore scholarships, work-study, or other funding sources if their program faces loan caps.
• Colleges aim to protect students from over-borrowing. While the changes may feel restrictive, the goal is to keep graduates from taking on unsustainable debt loads.

A recent report by the New York Federal Reserve underscores the issue: graduates in fields with lower wages or higher underemployment are among the most likely to default on loans by their late twenties.

Key Takeaway

These changes highlight a growing focus on linking student borrowing to post-graduate earning potential. For students, the shift underscores the importance of researching both program costs and career outcomes before committing to a degree path.