Colleges are introducing private loan programs to fill gaps created by federal funding caps on student loans. Yale University is among a growing list of schools creating new student-loan programs to cover federal financing gaps.

Student-loan repayment changes were codified in President Donald Trump’s spending legislation. The student-loan repayment changes include a $100,000 lifetime borrowing cap for graduate programs and a $200,000 lifetime cap for professional programs. Only 10 programs qualify for the professional designation, and the legislation excludes advanced nursing degrees from the professional designation. Some nursing programs cost more than $100,000.

Colleges could lend directly to students and handle repayment themselves for advanced degrees. Washington University School of Law announced in February that it will offer a new private loan exclusively to incoming law students who have exhausted all federal loan options. Under the new loan, students can borrow up to $25,000 a year at a fixed 7.5% interest rate. The financial aid office meets with each student to discuss responsible borrowing and repayment strategies.

Stefanie Lindquist, dean of Washington University School of Law, said, "The new loan program is institutionally funded and institutionally administered from beginning to end. The program is entirely in-house from entrance counseling to exit counseling all the way through repayment."

Yale's School of Public Health announced in December 2025 that it would introduce a new program offering loan terms comparable to, if not more competitive than, previous Grad PLUS loans. George Washington University created a task force to provide more information to graduate students on private loan options that are competitive with previous Grad PLUS rates. Duke University has a curated list of private lenders to help students compare their financing options. The legislation would eliminate the Grad PLUS program, which currently allows borrowers to borrow up to the full cost of attendance for advanced degrees.

Private student loans can have higher interest rates than federal loans, and private student loans do not offer the same relief and repayment programs as federal loans, such as Public Service Loan Forgiveness. Carolyn Fast, director of higher education policy at The Century Foundation, said, "Students really trust their schools to provide things that are in their best interests, and it raises some concerns to me that students might think that this is something other than what it is, which is potentially more expensive and riskier loans."

Democratic lawmakers released a report in early February finding that private lenders are making plans to expand their loan offerings due to federal repayment changes.