Applying to an MBA in 2026? What the changes to the US loan system could mean for you

There are many benefits to studying an MBA or business master’s—from building your skills and network to levelling up your career—but it’s important to consider how you’ll finance your business school journey.

MBA and business master’s programs are prime degrees that equip students with the leadership and management skills that corporate employers want. But this study comes at a cost, and many students rely on financial aid and loans to help fund their studies.

However, new changes to federal loans in the US means that if you are a domestic student applying in the 2026-2027 cycle, the way you finance your degree will likely be different, with alternative options such as private loans, scholarships, and employer sponsorship becoming more important to help fund the gap federal loans no longer cover.

If you’re planning to apply, here’s everything you need to know.

What is changing with student loans?

Previously, many MBA and business master’s students in the US relied on Grad PLUS loans—federal loans for graduate and professional students to help cover education costs—to fund their studies. These loans previously allowed many students to borrow up to the full cost of attendance, including tuition and some living costs, for graduate programs, including MBAs and business master’s. However, from July 1, 2026, Grad PLUS loans are being eliminated for new graduate borrowers.

If you’re borrowing for a new MBA or business master’s, this means you might not be able to fund the full cost of your program through federal loans after this date. Instead, most new students will be limited to Direct Unsubsidized Loans, with an annual cap of $20,500 and a total graduate-level cap of $100,000, within an overall lifetime federal borrowing cap of $257,500. (To note, some professional programs such as joint JD/MBAs, have higher limits which is why you will need to research your own case.)

Since many MBA programs are high in cost, this creates a funding gap between what federal loans will cover, and the full cost of tuition alongside living expenses. In other words, you may need to consider alternative funding options to cover the remaining cost of your tuition and living expenses.

If you’re a current student who already has a Grad PLUS loan for your program before July 1, 2026, you may qualify for a legacy provision which lets you continue borrowing under the old rules for a limited time. However, this only applies if you remain continuously enrolled in the same program and generally won’t apply if you start a new program after the cutoff.

How will this affect your MBA or business master’s budget?

Under the previous loan system, the full cost of tuition for US citizens applying to study in-country could usually be covered by federal funding. The changes to Grad PLUS introduce a new borrowing cap.

This means that new MBA or business master’s applicants after July 1, 2026, will be able to cover up to $20,500 through Direct Unsubsidized Loans, and will need to look into other methods to finance the rest of their program costs.

For example, the average tuition fees for an MBA ranked among the global top 20 in the US are $85,625 per year, meaning students looking to use Direct Unsubsidized Loans will have to fund the remaining $65,125 themselves—through private loans, scholarships, employer sponsorship, savings, or a combination of these methods.

If you qualify as a legacy Grad PLUS borrower who has received a loan disbursed for an existing program before July 1, 2026, you’ll be able to continue borrowing under the old rules for three academic years, or the remaining length of your program, depending on how long it is and how much you’ve already completed.

If you already have substantial undergraduate debt from student loans, and are closer to the lifetime cap, you’ll need to calculate how much you’re eligible to borrow. Private loan provider Ascent Funding has created a helpful tool for you to calculate what financing you’ll need.

Are you a legacy borrower or a new borrower?

To count as legacy graduate borrower—meaning you may be eligible to continue borrowing under the old rules for a limited time—you’ll need to have borrowed any Direct Loan, including Grad PLUS, for your program before the cutoff date of July 1, 2026.

Only students who have been continuously enrolled on their programs will qualify as a legacy borrower. This means that even if you have previously borrowed Grad PLUS for a program before, if you start a new MBA or business master’s program, you won’t count as a legacy borrower, and the new borrowing rules will apply.

How are other MBA or business master’s applicants planning to fill the gap?

Although the way you fund your business education might be changing, financing your MBA or business master’s is still possible through alternative options such as scholarships, employer sponsorship, and private loans.

Many business schools offer both merit and need-based scholarships for applicants, so it’s worth researching your school to see what financial support it provides. Other scholarships are also available, helping to subsidize costs through tuition waivers and other financial support. However, scholarships are limited in number and you may need to explore other options.

Another way to cover the funding gap is through taking out a loan with a private provider. Companies, such as Ascent—who GMAC is collaborating with—offer private loans with flexible repayment options to help cover the cost of going to business school.

The funding gap created by the new changes may also result in a larger reliance on savings or family support for some students. Employer sponsorship is also another way to help bridge the cost gap the federal loans won’t cover—certain large companies, particularly in industries such as consulting, finance and technology, will sponsor MBA programs for high-performing employees. Sponsorship typically covers full or partial tuition, usually in exchange for a commitment to return to work at the company after graduation.

Another option is to consider the format you study in. Full-time MBA programs which are taught in-person are typically the most expensive, while part-time or online programs can be more affordable due to continued income and reducing costs caused by taking time out of work or relocating to study.

Practical steps to take if you apply

If you’re considering applying for an MBA or business master’s, there are a few steps to take to help manage your finances and plan how to cover the funding gap not covered by federal funding.

1. Start by checking your federal loan history to see how close you are to the lifetime cap. This will give you an idea of how much you’re eligible to borrow, so you can calculate the remaining cost you’ll need to cover through other means.

2. There are also calculators available online to help you understand how the Grad PLUS changes will affect you and how you can pay for your MBA or business master’s.

3. Talk to financial aid offices at the schools you’re targeting to understand how they are responding to the changes in Grad PLUS loans. They can provide information on areas such as scholarships, institutional loans, and borrowing.

4. It may be helpful to run side-by-side cost and funding scenarios for different program types and start years to work out which is the most suitable option for you. It might be more cost efficient to study part-time to continue working, or you might decide to study a one-year program to see a quicker return on your business school investment and spend less time out of work.

If you’re aiming to apply for an MBA or business master’s starting in 2027 or 2028, it’s important to be prepared and start planning your financing options early. By planning how you’ll fund your studies in advance, you can build an early savings or sponsorship strategy to help cover the cost of your program.

Although the changes to federal loans in the US mean the way you’ll fund your MBA or business master’s will be different, this doesn’t mean your plans for business school have to change.

Through planning and alternative means of financial aid, you can still benefit from the knowledge, network, and career opportunities going to business school provide.

GMAC is collaborating with Ascent Funding—find out more about its loans here