The impact at the typical graduate school of education, by contrast, is likely to be minimal. In most graduate education programs, a single-digit percentage of students use Grad PLUS loans, and Grad PLUS accounts for only a small slice of revenue (see Figure 1). The disappearance of this lending stream will certainly affect graduate education programs, but most will be able to manage the impact. In fact, the effects may well benefit students. If certain students in these programs have extreme financial need, the institution should think about how to support them with institutional aid rather than point them to more borrowing through Grad PLUS.
In assessing OBBBA’s impact, administrators at some schools of education have fretted that their degrees are not being classified as “professional” under a new definition promulgated by the Education Department to enforce the law’s loan provisions. Not classifying education as professional “fundamentally misunderstands the education field,” according to a statement from the University of Pennsylvania’s Graduate School of Education, and “treats education as if it were a field without specialized training, licensure, or advanced expertise.”
But the label is misleading: The “professional” classification in this context does not carry a judgment on a degree’s worth or the level of expertise an occupation requires. Historically, the term “professional degree” has referred to a handful of high-cost but also high-earning fields such as medicine, dentistry, and law—and that is the understanding of the “professional” classification that the department’s definition seeks to preserve.
In recognition of these higher salaries, but also the higher costs involved for medical school and the like, OBBBA allows students in “professional” programs to borrow up to $50,000 per year, more than twice the maximum at standard graduate programs. The legislation restricts that extraordinary level of borrowing to programs where graduates earn salaries on par with doctors, dentists, and lawyers—and unfortunately, education doesn’t fit that description.
Thankfully, current levels of borrowing are low at most graduate education schools, so most of their degree programs will likely not need the “professional degree” classification. At a handful of programs (including several at the University of Pennsylvania), a large share of students do currently borrow above the new limits, but this level of debt is wildly out of line with the average for similar programs. Congress simply decided not to give the students of such programs access to loans designed for doctors and dentists.
Judging from the law’s design, Congress’s goal in drafting OBBBA was not to cut off loans for the majority of graduate students. Rather, the law’s loan limits recognize that a disproportionate share of the student debt crisis flows from a relatively small number of institutions charging excessive prices.
Since the federal government will no longer back those programs with unlimited loans, high-cost institutions have several options. Most obviously, schools could cut their tuition (or provide more financial aid) and thereby reduce students’ need to borrow. Or schools could try to help students get private loans. But these changes would require institutions to either put up the money themselves or convince third-party lenders that students’ expected financial returns for attending their programs justify the high tuition they charge. Either way, institutions will need to take more responsibility for their own high costs.
The same logic is evident in OBBBA’s caps on Parent PLUS, the loan program for parents of dependent undergraduate students. The new limits allow parents to borrow up to $20,000 per year—preserving Parent PLUS as a financing option but recognizing that unlimited Parent PLUS loans have led parents to take on debt they cannot afford. A recent investigation showed that many wealthy, prestigious colleges steer a disproportionate number of low-income parents to Parent PLUS loans while also providing aid to students without financial need.
As with Grad PLUS, the Parent PLUS problem is concentrated. Among undergraduates majoring in education in 2024–25, just 6 percent had parents who borrowed a Parent PLUS loan on their behalf (see Figure 2). The share borrowing above the new annual limit of $20,000 was even smaller. For education students, the average Parent PLUS loan (among borrowers) is under $12,000 annually.
But at certain schools, typical Parent PLUS borrowing is far higher. At one of New York University’s teacher education programs, 22 percent of families use Parent PLUS loans, and the average borrower takes out $46,000 per year. At a handful of universities, more than half of education majors have parents using PLUS loans.
