Proposed Student Loan Rules Could Limit Graduate Borrowing and Redefine Which Degrees Qualify as Professional
A major proposed shift in graduate and professional student loan policy
In January 2026, the Office of Postsecondary Education within the Department of Education released a Notice of Proposed Rulemaking that would significantly restructure federal student loan limits for graduate and professional programs. These proposed regulations implement statutory changes enacted under the One Big Beautiful Bill Act and are intended to address rising tuition, escalating student debt, and increasing taxpayer exposure.
Although these rules are not final and remain subject to public comment and revision, they offer a clear view into how federal policymakers are rethinking which degrees should qualify for higher federal loan limits and which should not. For taxpayers and families planning to finance advanced education, understanding the proposal now is critical.
What the Department is proposing
The proposed regulations would place new federal loan caps on graduate education and would phase out the Graduate PLUS program over time. In place of broadly available unlimited borrowing, the Department proposes higher loan limits only for students enrolled in narrowly defined professional degree programs.
The stated objective is to align federal lending with programs that are required for entry into licensed professions and that historically lead to higher and more stable earnings. The Department explicitly states that the proposal is not a value judgment about the worth of any degree, but rather a loan policy decision tied to statutory language and fiscal risk.
The proposed definition of a professional degree
A central feature of the proposal is a refined definition of what constitutes a professional degree for federal loan purposes. Under the proposed rules, a degree generally must satisfy a three part test.
- The degree must signify completion of the academic requirements needed to begin practice in a profession
- The profession must require skills beyond what is normally obtained through a bachelor degree
- The profession must generally require licensure before independent practice
Using this framework, the Department proposes to continue recognizing degrees such as medicine, dentistry, law, pharmacy, veterinary medicine, optometry, chiropractic, podiatry, clinical psychology, and certain theology degrees as professional degrees eligible for higher federal loan limits.
At the same time, the proposal explicitly excludes many common graduate programs from professional degree status, including MBAs, education degrees, public health degrees, nursing doctorates, physical therapy degrees, social work degrees, and occupational therapy degrees. The Department reasons that these programs are not universally required for entry into a licensed profession or do not consistently lead to independent practice.
Why the Department believes these changes are necessary
The Department’s policy rationale focuses on tuition inflation and borrowing behavior. Research cited in the proposed rules suggests that unlimited federal lending has contributed to rising graduate tuition, particularly in programs where borrowing limits historically did not bind.
By tightening loan eligibility and limiting higher loan caps to professions that require licensure, the Department believes institutions will face pressure to restrain tuition growth, students will be less likely to overborrow for low return degrees, and taxpayers will face lower long term subsidy costs.
The proposal also reflects a broader shift toward evaluating education financing through an economic return lens rather than a credentials based approach.
Opposition and concerns raised by professional organizations
The proposed rules have drawn opposition from higher education institutions and professional organizations, including the AICPA. Critics argue that the professional degree definition is overly narrow and fails to reflect modern licensing pathways.
For example, the AICPA has long supported flexible educational pathways to CPA licensure, including master level and MBA programs that satisfy the 150 credit hour requirement. Under the proposed framework, those degrees would not qualify for higher federal loan limits, even though they are commonly used to meet licensure requirements.
Opponents also warn that restricting federal loans may disproportionately affect students from lower income backgrounds, potentially limiting access to advanced education in fields where licensure requirements vary by state or where professional advancement depends on graduate study rather than formal degree mandates.
What this means for taxpayers and families today
Because these rules are only proposed, no immediate changes apply. However, families considering graduate or professional education should factor regulatory uncertainty into their planning. Programs that rely heavily on federal loan availability may face higher scrutiny, rising private loan reliance, or structural tuition changes if the rules are finalized.
From a tax planning perspective, these proposals reinforce the importance of coordinating education decisions with long term income expectations, employer assistance programs, and available education tax benefits.
See current federal rates on the Economic Dashboard.
Proposed Rulemaking Notice:
Federal Register Notice of Proposed Rulemaking – Reimagining and Improving Student Education
Public comments must be submitted on or before March 2, 2026.
