Colleges and universities have previously been able to set pricing for their graduate and professional programs knowing that those students were generally able to access federal loan funding, if needed, to fund their education. The change in graduate loan caps foundationally shifts that assumption. While the current injunction offers some potential relief, this change creates concern for students’ ability to afford graduate education. It may also have implications for higher education enrollment, pricing, and academic portfolio mix, as well as the labor market for workers with graduate or professional level preparation.
Why the Graduate Loan Cap Change Matters
Graduate education has historically operated with fewer borrowing constraints than undergraduate programs, allowing institutions to establish a variety of pricing structures (often differentiated at the program level) that account for an institution’s market position, demand for the academic program, and potential ROI of the degree. The finalized changes to loan caps introduce a substantive new consideration in graduate pricing: students’ ability, if needed, to fund or secure financing for their graduate education.
With changes to federal graduate loan caps, students who historically could have utilized federal loans to support their education will either have to pay tuition directly or will need to seek graduate student loan funding if exceeding these caps through other providers such as banks and private lending sources. These private student loan sources may provide less favorable terms than federal student loans to borrowers, may be more difficult to qualify for, and may require less financially established borrowers to secure a co-signer on their loans. This creates a barrier to loan funding that limits access to a graduate degree and certain careers that require graduate and professional education.
For colleges and universities, these changes may:
- Lead to lower graduate and professional enrollments if potential students are not able to secure a loan needed to enroll or remain enrolled in a graduate or professional program.
- Increase the intensity of program-level ROI, particularly in fields with lower post-graduation earnings.
- Amplify competition among graduate and professional schools, especially among institutions with lower cost graduate and professional programs, schools that are able to offer significant aid to graduate students, or for students with greater ability to self-fund their education.
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A Student-Centered, Market-Aligned Approach to Price
This shift raises a critical question: Do we actually know how sensitive our prospective graduate students are to price?
Many institutions have high-level insight, trends, yield patterns, response to aid or assistantships, and competitor benchmarks. Fewer have a program-level, segment-specific understanding of price sensitivity that reflects:
- Differences across disciplines (e.g., education vs. data science)
- Variations by student segment (e.g., in-state vs. out of state, adult learners vs. traditional)
- Regional and modality differences (online vs. in-person, urban vs. rural markets)
As financing for graduate education becomes more constrained, an awareness of your market and the variation between prospective student segments is a critical asset to inform your price strategy, ensuring you meet the needs of prospective students and protect your enrollment.
A graduate price sensitivity study helps leadership answer questions like:
- At what price points do we see meaningful erosion in demand?
- How do students weigh price against brand, modality, and outcomes?
- How do students plan to fund their graduate education and how may they alter their enrollment plans because of changes in federal graduate loan caps?
Reframing the Value Proposition
The value that your institution provides students may become increasingly important in positioning your programs. If students have less borrowing capacity, they will be more selective about where they allocate it. This is an opportunity for your institution to articulate and deliver:
- Clear career outcomes and anticipated ROI
- Flexible pathways to a degree, such as including accelerated options where curricular appropriate
- Internships, co-ops, and other forms of hands-on or experiential learning
What You Can Do Today
Although graduate loan cap changes are finalized, court challenges have offered a bit of a pause for some programs. While the outcomes of these challenges are not known, colleges and universities should prepare for the changes to ultimately take effect in some capacity. Here are a few things that you can do today:
- Conduct a graduate program-level price sensitivity analysis: Identify which programs are most vulnerable to financing constraints and for which programs a new price strategy may be most appropriate to maintain enrollment levels.
- Audit portfolio exposure: Assess how much of your graduate tuition revenue comes from programs that may be impacted by graduate loan caps.
- Revisit financial aid strategy: Consider whether institutional aid should be increased or needs to be more targeted, particularly for programs most affected by borrowing limits.
- Strengthen your mindshare around outcomes: Ensure that program websites communicate your value in concrete, outcomes-driven terms and digestible images.
- Build partnerships: Work with your state or industry partners to develop financing options for prospective students. Could your state offer a graduate loan program like Connecticut and Minnesota? Are industry partners willing to fund students for a work commitment post-graduation?
Finally, you can help your graduate program portfolio adapt and adjust to the changing landscape and ensure your pricing strategy is ready by using Encoura’s Price Sensitivity Study. It provides a data-driven way to align your price with graduate student value perceptions about your programs. Find out more!