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Experts say other states may consider similar initiatives
Connecticut may create a new taxpayer-subsidized graduate student loan program to offset upcoming federal limits on certain borrowing.
Gov. Ned Lamont is supporting legislation to issue $10 million in bonds to underwrite graduate student loans. The One Big Beautiful Bill Act, signed by President Trump, places new limits on borrowing for undergraduate and graduate programs.
The bill is pending as of March 30. It would allow the Connecticut Higher Education Supplemental Loan Authority to issue loans for “eligible” programs. Officials have criticized the Trump administration for limiting the amount of taxpayer-subsidized student loans for programs including nursing and counseling.
Graduate students in law and medicine can borrow up to $200,000 in taxpayer subsidized loans, while others can only borrow $100,000. Nursing degrees are currently excluded from the higher limits.
“I’m particularly concerned that these new federal changes are going to make it even harder for students to seek graduate degrees in areas such as nursing, social work, and physical therapy, when we actually should be doing more to encourage people to enter these fields,” the Democratic governor stated in a news release.
Lamont (pictured) said the new loan program will “ensure that the opportunity for people to seek graduate degrees is still obtainable and not only for those whose families have the means.”
The effort has the support of Rep. Greg Haddad and the state loan authority as well.
Josh Hurlock, deputy director of the Connecticut Higher Education Supplemental Loan Authority, explained the program further in a phone interview with The College Fix.
“The federal Grad PLUS loan program has historically been extremely accessible to graduate students, with only minimal credit checks and virtually no assessment of a borrower’s long‑term ability to repay,” Hurlock said. “While that level of access helped many students finance their education, it also meant that borrowers could easily take on large amounts of debt, even in situations where repayment would later become difficult.”
He added that the initiative aims to create a state-level alternative that maintains access to graduate loans while ensuring the state lending authority follows standards that prevent borrowers from taking on excessive financial risk. The program, he noted, is built on principles of responsible lending to help students secure funding without facing debt that exceeds their ability to repay.
Rep. Haddad, a Democrat, did not respond to emails and phone calls from The Fix in the past several weeks, seeking comment on credit risk, safeguards to prevent excessive borrowing, and any similar successful programs.
In a January interview for Inside Higher Ed, Haddad expressed optimism about the program’s potential to support students despite some details still being finalized.
Haddad said he expects an “attractive product” that can “solve this problem for Connecticut students. Inside Higher Ed reported exact interest rates and borrower fees have not been determined yet.
Expert says states could benefit from program, but there are risks
Several experts spoke to The College Fix about the pros and cons of the proposed legislation and whether other states may follow suit.
“The key potential positive of the proposal is that it expands access to programs in fields such as nursing and education that are of interest to the state, and this would increase long-term tax revenue because these programs generally pay off for students,” University of Tennessee-Knoxville Professor Robert Kelchen told The Fix via email.
He leads the school’s department of educational leadership and policy studies.
However, he also noted the potential risks with this plan.
“States can offer loans at slightly lower interest rates than private lenders because they are not trying to make a profit, but that also increases the risk of financial losses,” Kelchen said.
Kelchen pointed to precedents in states like New Jersey, Georgia and Pennsylvania, adding that new programs demand upfront costs some may avoid due to repayment worries or federal policy hopes.
For example, Georgia’s Student Finance Commission administers the HOPE Scholarship and grant programs, which provide lottery-funded aid to eligible college students.
An Indiana University professor who studies student loans said other states are considering similar options.
“I have read a few articles in the last couple of weeks that seem to suggest that Connecticut is not alone in pushing for ways around the student loan caps,” law Professor Christopher Ryan told The Fix.
More states could create their own program depending on the outcome of other student loan issues, such as changes to the Public Service Loan Forgiveness program.
The Trump administration is attempting to place limits on which nonprofits can qualify for this program. Officials would like to see employees of groups that promote illegal immigration or transgender surgeries for minors barred from accessing the debt relief.
“Because of efforts like this, I would venture that other states begin to fill the gaps resulting from the federal student loan caps,” Ryan said.
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