The Education Department has reached consensus on a suite of changes to federal aid that could upend the viability of some graduate programs.
The changes interpret the budget-reconciliation law Congress passed this summer, which imposes limits on how much money students can borrow from the government for graduate education. The law eliminated the Grad PLUS loan program, which for the past 20 years has allowed graduate students to take out unlimited federal loans up to their full cost of tuition.
Perhaps the most contentious issue of the week centered on defining a “professional” versus “graduate” program.
According to the consensus definitions, approved Thursday after two rounds of negotiated rulemaking, a degree will be considered professional if the field requires skills beyond those needed to receive a bachelor’s degree. The distinction matters: Professional students will be able to take out $50,000 in loans per year, or $200,000 total, more than double that of a graduate student. A graduate degree, meanwhile, will be defined as a program that is “above the baccalaureate level” and awards a “graduate credential.”
A lot of students are going to need to find alternative ways to get loans.
The classification could affect whether students will be able to afford graduate school, particularly master’s programs, and how much colleges, which have traditionally seen master’s degrees as revenue generators, will be able to charge for tuition. With a $20,500 annual cap on federal loans for nonprofessional programs, many prospective students may reconsider getting a master’s degree at all.
“We realize [this clarification] is important and the stakes are high for institutions of higher education,” said Nicholas Kent, the recently confirmed undersecretary of education, during Wednesday’s afternoon session. “This may not meet the needs of every institution and every program, but it’s certainly going to get us a little bit closer to where we are today versus where we were on Monday.”
Professional programs, according to the consensus definition, include those in medicine, law, dentistry, veterinary medicine, clinical psychology, and theology. Ph.D. and other doctoral programs may also be considered professional, so long as they involve at least six years of postsecondary education, including at least two years of postbaccalaureate coursework.
The negotiated rulemaking process involved Education Department officials, higher-education advocates, and college administrators. The consensus definitions reached this week will be posted on the Federal Register for public comment before they are finalized. The loan caps are scheduled to take effect in July 2026; the Office of Management and Budget must ultimately sign off.
Some negotiators this week had concerns about the new distinctions and how many degrees will actually meet the “professional program” requirements. According to the department, roughly 44 degree programs could qualify, although the actual number will likely be lower.
“It is the administration’s position that we are concerned with one array of graduate debt, especially for programs that are not providing a good return on investment for students and their families,” Kent said.
Advocates for the loan limits say they can safeguard students from accumulating excessive debt and help incentivize colleges to lower tuition.
Some researchers expect that the changes will reduce the amount of government loans available for nearly a third of all applicants, potentially cutting off their ability to pursue graduate school, according to a recent study.
“A lot of students are going to need to find alternative ways to get loans,” said Jordan Matsudaira, a professor of public affairs at American University who worked on the study.
Matsudaira said a cap on federal aid will likely prompt students to seek private loans, which allow for higher borrowing limits but have other drawbacks, like higher interest rates and fewer forgiveness programs to pay off debt. Students may not even qualify: Matsudaira said private-loan vendors typically rely on “underwriting” or looking at people’s FICO score to determine their eligibility. Many students, he said, don’t have enough credit history to be considered.
The private-loan process is easier for those attending highly selective colleges, which often have partnerships with certain banks to offer better borrowing terms, Matsudaira said.
What’s more, students enrolled part time — about one third of all graduate students — will have their loan caps pro-rated, further shrinking their access to federal aid.
The consensus regulation on professional and graduate programs comes a few days after the Trump administration released a final rule on who can qualify for Public Service Loan Forgiveness, or PSLF, which forgives remaining student debt for borrowers who work at a qualifying government or nonprofit organization.
Beginning July 1, public-service employers that engage in “unlawful activities,” such as working with undocumented immigrants or providing gender-affirming care to minors, will no longer qualify.
The ruling has been met with resistance from Democratic lawmakers and labor-advocacy groups that view the changes as causing harm to thousands of recent students who pursued higher education with specific career goals in mind.
“Nonprofit employees aren’t going to be able to rely on the program being there when they’re making really important decisions about their career and where they want to work,” said Sarah Saadian, senior vice president for public policy and campaigns at the National Council of Nonprofits. “That means that nonprofits are going to face a harder time recruiting the staff that they need to work at their organizations and keep them operating well.”
The National Council of Nonprofits, alongside a coalition of more than a dozen cities, organizations, and labor unions, sued the Department of Education on Monday for what they see as an attempt to “silence” organizations that disagree with the administration’s priorities.
