CBA Releases New White Paper on Forthcoming Changes to the Student Lending Market

WASHINGTON, D.C. – The Consumer Bankers Association (CBA) today released a new white paper, Recent Graduate Student Lending Reform: Analysis and Recommendations, that outlines forthcoming changes to the student lending market with the implementation of H.R. 1, and specifically changes to the GRAD Plus lending market by the federal government, set to take effect in July 2026. 

The purpose of the paper is to examine how the private sector can support the lending needs for future borrowers who may have otherwise received a GRAD Plus loan, and provide recommendations to enhance greater transparency and data, which can not only help better underwrite borrowers and arm borrowers with more information to assess the costs and benefits of different graduate programs.  

The paper provides additional considerations for a broad range of stakeholders, including schools, states, and policymakers to ensure the changes made in H.R. 1 can drive greater transparency, market-discipline, and lower costs—pushing for better borrower options and outcomes for their graduate programs.

This white paper follows a roundtable discussion CBA hosted with a diverse set of stakeholders in Fall 2025.

Policy Recommendations

Improve federal data availability and enhance loan reporting.

The federal government can provide greater transparency by producing data on school and program performance and existing federal loans held by students. This could enable private markets to more efficiently and accurately underwrite education loans.

Fair-lending clarity is necessary to ensure lenders can use data
responsibly and compliantly.

Greater clarity around the permissible use of program-level data would help ensure that private lenders can responsibly incorporate information that protects students—informing borrowers about specific outcomes of university programs while also supporting more affordable, competitive credit options.

Encourage states and schools to address affordability directly.

States and schools can continue to explore opportunities to address the rising cost of higher education – particularly for programs and students deemed to be most in need of support. These may range from new approaches to grants and tuition assistance/reduction, as well as risk-sharing agreements and loan forgiveness.

Background

In July 2025, Congress eliminated the Grad PLUS student loan program as a first step toward addressing rising graduate tuition costs. Shifting student borrowing toward a more market-based model can help mitigate the risk that the cost of advanced education exceeds the benefits a student can expect after graduation – an important change for individual borrowers and the broader economy. However, significant work remains.

In this white paper, CBA estimates the private market could underwrite 75 percent of students who would have applied for Grad PLUS, helping maintain access to prudent financing of graduate education. The reforms enacted by Congress will introduce greater market discipline and help to drive down the cost of graduate education. Without additional actions to address tuition costs, increase market participation, and provide additional funding, however, some students may still struggle to fully fund their graduate education.

While these are precisely the students who will now be protected from excessive federal loans they could not repay, further steps should be considered to facilitate their access to advanced degrees without reimposing unsustainable federal debt burdens.

Dive Deeper

To read the full white paper, click HERE. For an Executive Summary of the paper’s findings and key recommendations, click HERE.

CBA Advocacy

• To read CBA’s comment letter to the Senate Banking Committee for its September 2024 hearing entitled, “Back to School: Shedding Light on Risks and Harm in the Private Student Lending and Servicing Market,” click HERE.