New Federal Student Loan Limits Explained: What Nurses and Healthcare Professionals Need to Know
The U.S. Department of Education (ED) is currently in the process of revising its existing regulatory framework in an effort to comply with new federal student loan limits contained in the Republicans’ “One Big Beautiful Bill Act” (OBBA). Under ED’s current proposal, many healthcare fields, including nursing, would not qualify for the new maximum borrowing limits for graduate studies. In this article, I’ll provide a detailed overview of this issue with a focus on nursing and other healthcare professionals.
Overview
The OBBA’s changes to the federal student loan program actually affect nurses and healthcare professionals on two levels. The first level involves borrowing limits for federal student loans across the board. The second level involves defining categories to determine which subject matters qualify for higher post-graduate student loan limits.
Everyone has been focused on the second set of changes because the OBBA leaves the exact definition of the categories to ED. Therefore, it’s open for debate. However, the first set of changes will also have an impact on aspiring healthcare professionals even though they apply to the entire system. So, let’s unpack them both.
How does the OBBA change the federal student loan program?
First, we need to understand the various current federal student loan options and what, if anything, the OBBA changes about each. So, let’s run through each option.
Direct Subsidized and Unsubsidized Loans for Undergraduates – Unchanged
The OBBA makes no changes to direct subsidized and unsubsidized loans for undergraduates. So, federal student loans for dependent undergrad students will continue to have a lifetime cap of $31,000 and those for independent students will continue to have a lifetime cap of $57,500. Both will continue to allow no more than $23,000 of the total to be subsidized. Additionally, all of the annual borrowing caps will remain the same.
To clarify, “Direct” means that the loan comes directly from the federal government. There is no bank involved. And “Subsidized” means that the federal government pays the interest on the loan while the borrower is enrolled at least half-time, during the 6-month grace period after leaving school, and during any qualifying deferment. Interest begins accruing only when the borrower enters repayment and is not in a deferment.
Direct PLUS Loan — Parent PLUS for Undergrads – Changed
Currently, the Parent PLUS loan allows parents of undergrad dependent students to borrow up to the cost of attendance minus other aid. So, the cost of attendance is the cap for this type of loan.
The OBBA mandates caps for these loans. Loans of this type originating on or after July 1, 2026 will have a cap of $20,000 per year per dependent student and $65,000 lifetime per dependent student.
This means that the lifetime cap for a dependent undergrad student is $96,000, $31,000 to them and $65,000 to their parents. This is going to affect a huge number of undergrad students and nobody is really taking about it because all the focus has been on the new caps for graduate students that I’ll talk about below.
To clarify, the all-in cost of a 4-year college degree is most often higher than $96,000. For example, the all-in cost for public in-state colleges is typically $25k-$30k per year. Public out-of-state, private nonprofit and elite private colleges are far more expensive than that.
The groups that this change will affect the most include middle-income families who don’t qualify for Pell or other large grants, families who relied on uncapped Parent PLUS loans to cover gaps, students attending private colleges, students attending out-of-state public universities and students from families with poor credit who already struggle to get private loans. In my view, this change will have a larger impact on the number of registered nurses, physical therapists, occupational therapists and other healthcare professionals our society trains than the changes to graduate loans that everyone is focused on.
Direct PLUS – Grad PLUS Loans – Eliminated
Under the current federal student loan program, Grad PLUS Loans allow graduate students to borrow up to the cost of attendance minus other aid the student receives. These loans do not have a lifetime cap, so the cost of attendance is essentially the cap.
The OBBA eliminates this type of loan altogether. It’s important to note that graduate students relied on Grad PLUS Loans once they reached the limits on their Direct Unsubsidized Loan for Graduates which I discuss below.
Direct Unsubsidized Loan for Graduates – Replaced
Under the current federal student loan program, Direct Unsubsidized Loans for Graduates allow graduate students to borrow up to $138,500 total where the total includes all undergrad loans and with no more than $65,500 subsidized. The OBBA replaces this with two different types of loans.
Direct Unsubsidized – Graduate (non-professional)
The new Direct Unsubsidized Graduate Loan for non-professionals allows non-professional graduate students to borrow up to $20,500 per year and up to $100,000 lifetime. It’s important to note that the calculation for these maximums excludes any undergraduate borrowing.
Direct Unsubsidized – Professional-degree students
The new Direct Unsubsidized Graduate Loan for professional-degree students allows professional-degree graduate students to borrow up to $50,000 per year and up to $200,000 lifetime. It’s important to note that the calculation for these maximums excludes any undergraduate borrowing.
What’s the difference between Professional-degree and non-professional degree?
The term “professional degree” has always had a specific meaning in federal higher-education regulations. For example, the Code of Federal Regulations defines it as follows:
“‘Professional degree’ means a degree that signifies both completion of the academic requirements for beginning practice in a given profession and a level of professional skill beyond that normally required for a bachelor’s degree. Professional licensure is also generally required.”
It goes on to provide examples like Pharmacy (Pharm.D.), Dentistry (D.D.S. or D.M.D.), Veterinary Medicine (D.V.M.), Chiropractic (D.C. or D.C.M.), Law (L.L.B. or J.D.), Medicine (M.D.), Optometry (O.D.), Osteopathic Medicine (D.O.), Podiatry (D.P.M., D.P., or Pod.D.), and Theology (M.Div., or M.H.L.).
A non-professional degree is essentially any degree that is not a professional-degree. In fact, federal regulations don’t really use the term “non-professional degree”. Instead, they tend to us the terms “graduate” and “graduate program”.
Why is there suddenly a controversy over the definition of Professional-degree?
The OBBA delegates the authority to define “professional degree program” to ED. ED’s current definition proposal excludes nursing and many other health-related fields. As a result, interest groups representing these healthcare professions are lobbying for inclusion.
Thus far, ED has chosen to apply a strict definition of “professional degree program” as it currently stands in the Code of Federal Regulations. However, this definition wasn’t pertinent to federal student loans until the OBBA’s changes. As a result, the definition flew under the radar for decades with respect to federal student loans.
This has interest groups representing the excluded healthcare professions arguing that the current definition is anachronistic since these professions have undergone major changes since the government first established the definition. For example, the American Association of Colleges of Nursing (AACN) argues that post-baccalaureate nursing graduates have become “independent providers, systems leaders, and researchers” since the original codification of this definition.
How will changes to the federal student loan program affect nurses and other healthcare professionals?
As I mentioned above, the OBBA’s changes to the federal student loan program will affect dependent-undergraduate and graduate nurses and other healthcare professionals due to its requirements for new, lower borrowing caps at both levels. Meanwhile, interest groups are engaged in an effort to get ED to include nurses and other healthcare professionals as “professional degrees” so they can at least qualify for the higher graduate limits.
Either way, it’s fair to say that the new limits will not allow undergraduate or graduate students to cover the cost of most degrees using only federal student loans given current education costs. Therefore, students will need to work with private lenders or find another way to pay. Alternatively, colleges may consider lowering their prices.
Why did President Trump and Republicans make changes to student loans?
President Trump and Republicans provide a number of reasons for the OBBA’s changes to the federal student loan program. First, they argue the caps put a lid on unsustainable borrowing and protect taxpayers. It’s important to note the CBO estimates that federal student loans are a net loss to taxpayers.
Additionally, supporters argue that the limits will pressure education institutions to be accountable for education outcomes and lower tuition costs. Similarly, they posit the limits will force students to consider the potential return on their investment more seriously before moving forward with a degree program. Finally, they assert that the changes will simplify and streamline the federal student-loan system and repayment.
It’s worth noting that then candidate Trump pitched lowering the income cap for student loan repayment and lowering the forgiveness date to 15 years from 20. Fast forward to 2024 and the Heritage Foundation’s Project 2025, now a key factor driving administration policy, called for eliminating or significantly restricting federal student-loan forgiveness programs and recommended reducing the federal government’s role in federal student lending, including possibly privatizing student loans or moving them out of the traditional federal system.
