The Trump administration's Department of Education has introduced sweeping changes to graduate student financing under the One Big Beautiful Bill Act (OBBBA). 

Central to the reform is a narrowed federal definition of what constitutes a "professional degree", a change set to dramatically reduce federal borrowing capacity for many fields that traditionally required advanced training. This move flows from a broader agenda to impose fiscal restraint on domestic programs while shifting federal priorities toward national security and defense.

According to the Department, the previous system gave universities "an unlimited tuition ride on the taxpayer dime," and the new rules are intended to impose "commonsense limits and guardrails" on borrowing.

However, the shift has generated widespread alarm. Several high-demand sectors, particularly healthcare and education, say the move contradicts established definitions of professional practice and risks shrinking essential workforces at a time of nationwide shortages.

Nursing schools, architecture programs, and social work associations have warned that the rule cuts off federal aid precisely where it is most needed.

What the new classification means

Beginning July 1, 2026, the Department will eliminate Grad PLUS loans, which previously allowed students to borrow up to the full cost of attendance. Under the new Repayment Assistance Plan (RAP), borrowing is capped at:

• $50,000 per year and $200,000 lifetime for programs classified as professional
• $20,500 per year and $100,000 lifetime for all other graduate programs

Still classified as "professional":

• Medicine,
• Dentistry,
• Pharmacy,
• Law,
• Optometry,
• Veterinary medicine,
• Osteopathic medicine,
• Podiatry,
• Chiropractic,
• Theology,
• Clinical psychology.

No longer classified as "professional":

• Nursing,
• Physician assistants,
• Physical therapy,
• Audiology,
• Social work,
• Education,
• Architecture,
• Accounting,
• Speech-language pathology,
• Occupational therapy,
• Counseling/therapy,
• Business master’s programs,
• Engineering.

Nursing organizations note that these excluded programs require licensure, advanced training, and direct patient care, criteria historically used to define professional degrees. 

Who will be affected

The reform disproportionately affects low- and middle-income students who rely on federal loans and often lack co-signers for private credit. Analysts warn that many will simply be priced out of graduate training. 

The burden is expected to fall particularly heavily on women, who make up the majority of students in nursing, education, counseling, and social work. Critics describe the policy as reinforcing gender and income inequalities by maintaining higher loan limits for traditionally male-dominated, high-income fields while restricting access to lower-paying but socially essential professions. 

Further strain on US healthcare sector

Healthcare faces the sharpest projected impact, as the US is currently short approximately 295,800 nurses, with up to 193,000 RN openings annually and impending retirements, as nearly half of nurses are over age 50. By 2035, 42 states are expected to still experience nurse shortages. 

Advanced practice registered nurses, physician assistants, physical therapists, audiologists, and speech pathologists, all excluded, provide essential primary care, especially in rural regions where only 11% of physicians practice.

The reclassification of degrees comes against the backdrop of a broader shift in the Trump administration's budget priorities. In the FY 2026 proposal, non-defense discretionary spending was slated to be cut by approximately $163 billion (about 22.6% of its level) while defense spending was increased by approximately 13% or more (to over $1 trillion), and homeland-security spending rose by about 65%.