A sweeping set of student loan changes from the One Big Beautiful Bill Act (OBBBA) takes effect this week, reshaping repayment options, borrowing limits and federal aid eligibility for millions of students and their families. Among these changes, few have drawn more sustained controversy across higher education than the Department of Education's (ED) narrow definition of which graduate programs qualify as "professional degrees," a designation that determines whether students can borrow up to $50,000 a year or face a sharply lower $20,500 cap.
A Contested Definition
Under OBBBA, students in graduate "professional" programs may borrow significantly more than their peers in other graduate programs: $50,000 annually and $200,000 over a lifetime, compared with $20,500 annually and $100,000 over a lifetime for general graduate students. The law sets out a three-part test for what counts as professional: a program that prepares students to begin practicing in a profession, demands skills beyond a bachelor's degree and typically requires licensure.
Rather than applying that test broadly, ED compiled a fixed list of only 11 qualifying programs: clinical psychology, dentistry, chiropractic, law, medicine, optometry, osteopathic medicine, pharmacy, podiatry, theology, and veterinary medicine. Notably absent are nursing, physical therapy, social work, public health, and other fields that clearly meet the statutory definition.
Department data show roughly 429,000 borrowers in 2023-24 took out more than the new annual limit would allow. An ACE analysis found that 39 percent of students in master's-level health programs borrow an average of $28,500 more per year than the new limits permit, while 67 percent of doctoral-level health students exceed the cap by an average of $26,700 annually.
Litigation Brings Temporary Relief
On June 25, U.S. District Judge Beryl Howell granted a preliminary injunction blocking ED’s narrowed definition, ruling in a case brought by eight trade associations, including the American Association of Nurse Practitioners and the PA Education Association.
Howell found that Congress had not given ED discretion to narrow the definition once it adopted the existing regulatory standard by reference. The ruling forces the department to apply the law's original, broader criteria while litigation continues, though it does not eliminate the underlying loan limits altogether. An ED spokesperson said officials are reviewing the order.
Legislative and Appropriations Efforts
Two efforts are underway on Capitol Hill to provide a much-needed legislative solution.
Rep. Mike Lawler, (R-NY) introduced the bipartisan Professional Student Degree Act (H.R. 6718) to write an expanded list directly into statute covering these critical fields. ACE is actively advocating for the bill's passage and subsequent enactment. Interested stakeholders can support this effort by contacting their members of Congress by clicking here.
Then on June 15, the House Appropriations Committee voted 34 to 28 to advance an education funding bill with an amendment that directs ED to classify advanced nursing programs as professional degrees. If enacted, this change would grant nursing students access to higher federal borrowing limits.
While this provision is a significant win for the healthcare workforce pipeline, it remains an incomplete solution by singling out nursing while excluding other critical professional fields. Also, because this language is currently only in a House appropriations bill, nursing still falls under the OBBBA rule set to go into effect Wednesday.
Emmanual Guillory, senior director of government relations at ACE, noted that the amendment remains relevant.
"It would be more ideal if Congress could agree to this before July 1," Guillory told Inside Higher Ed in an interview. "But the Department of Education would have to abide by this if and when it is agreed to, regardless of timing."
Other Changes Taking Effect July 1
The professional degree fight is only one piece of a broader set of changes arriving with the new fiscal year. Institutions and financial aid offices should also be prepared for:
- Pell Grant expansion. Short-term
workforce training programs lasting eight to 15 weeks become
Pell-eligible for the first time, though implementation guidance is
still developing.
- End of the SAVE plan. More than seven million borrowers in the Biden-era SAVE repayment plan must transition to a new plan within roughly 90 days of notice or be automatically moved into a less flexible option.
- New repayment plans. Borrowers taking out loans after July 1 will choose between two options created under OBBBA: the income-based Repayment Assistance Plan (RAP) and the Tiered Standard Plan, which scales repayment terms from 10 to 25 years based on loan balance.
- Lower graduate loan limits. General graduate borrowers face a $20,500 annual cap and $100,000 lifetime cap, down from unlimited cost-of-attendance borrowing, with exceptions for students enrolled by June 30, 2026, who maintain continuous enrollment.
- Parent PLUS caps. New Parent PLUS loans are limited to $20,000 per year and $65,000 per dependent and qualify only for the Tiered Standard Plan, eliminating income-driven repayment and Public Service Loan Forgiveness (PSLF) eligibility for future borrowers.
- Public Service Loan Forgiveness restrictions. ED gains authority to deny forgiveness to borrowers whose employers are deemed to have a "substantial illegal purpose," a standard the education secretary will define.
Join Us for a Live dotEDU Podcast Conversation
On July 7, join the dotEDU hosts along with guest Melanie Storey, president and CEO of the National Association of Student Financial Aid Administrators, for a discussion about the new rules and the implementation challenges campuses are dealing with moving forward.
Register now to submit your questions in advance or join the conversation live.