Graduate and professional degrees help you build expertise in a specific field, and they can increase your earning potential. Just like undergraduate programs, these programs have increased in cost over the last two decades.
If you’ve earned an advanced credential, or had friends who have completed similar programs, you may think you know how financial aid and finance options work. However, the One Big Beautiful Bill (OBBB), things are going to change quite a bit starting this July.
Before the passing of the OBBB, your program level did not have an impact on your financial aid options. However, the bill now requires your financial aid office to identify you as a graduate or professional level student, and this distinction can limit your federal student loan options.
Defined: Graduate and Professional Level Programs
The U.S. Department of Education now defines—for financial aid purposes only—what a “graduate” and “professional” program is, and this distinction will impact your federal student loan limits.
A graduate student is now defined as a student enrolled in a program of study above the baccalaureate level that leads to a graduate credential that is not a “professional” degree.
How is a “Professional” Student Defined?
A professional student is a student enrolled in a program that leads to a degree in the following fields:
- 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.)
- Theology (M.Div., or M.H.L)
- Clinical Psychology (Psy. D, or Ph.D.)
Who’s not on the list
There has been some controversy about who is not included in the (very) specific program list, and the OBBB does not allow schools to have any discretion on their program levels. For example, students enrolled in the following programs would not be classified as professional students, regardless of the type of credential they are earning:
- Nursing
- Healthcare Practitioners, like Physician Assistants, Physical Therapists, and Occupations Therapists
- Social Workers
- Educators
The New Loan Math: Graduate and Professional Students
Students working toward advanced credentials at the graduate and professional levels have been using Direct Unsubsidized Loans and Grad PLUS Loans to cover any financial aid gaps they’ve had after using school aid, scholarships, employer assistance, and personal resources. However, there are major changes coming to both program—Grad PLUS Loan availability and Direct Unsubsidized Loans—due to the OBBB.
Grad PLUS Loans after July 2026
Students starting new programs on or after July 1, 2026, will not have the ability to borrow a Grad PLUS loan. This program is being phased out and will only allow students who have already started their programs prior to July 1, 2026, and borrowed a Grad PLUS loan up to three additional years to borrow a PLUS loan to complete their programs.
This may create a challenge in funding your advanced credential program. Many students opted for these PLUS loans over private student loans due to their accessibility and limited credit check required.
New Loan Limits for Graduate and Professional Students
There has never been a distinction between a graduate and professional student that would affect eligibility for federal student loans. But starting July 1, 2026, this distinction will determine your annual and aggregate loan limits.
- Graduate loan annual loan limits will stay the same at $20,500. However, there will be an aggregate loan limit of $100,000.
- Any student determined to be a professional student will have an annual loan limit of $50,000, with an aggregate loan limit of $200,000 (inclusive of all graduate and professional loans).
This distinction between a graduate and professional student is crucial to understand. If you are considered a graduate student, you will have a lower loan limit, and you will not be able to use a Grad PLUS Loan to cover your financial gap.
In addition, all borrowers will now need to contend with a lifetime loan limit of $257,000, not including Parent PLUS Loans.
| Loan Limits | Pre-July 1, 2026 | Post-July 1, 2026 | |
|---|---|---|---|
| Graduate/Professional | Graduate | Professional | |
| Annual | $20,500 ($40,500 Health Professionals) | $20,500 | $50,000 |
| Aggregate | $138,500 ($224,000 Health Professionals) | $100,000 | $200,000 (inclusive of graduate loans) |
| Lifetime Loan Limit | N/A | $257,000 (not including Parent PLUS Loans) | |
Your Action Plan: How to Fund Your Advanced Degree
While these changes were made with the intention to curb borrowing and prevent students from jeopardizing their future financial stability, they will also have an impact on your financing plan. There is the hope that universities begin to reduce their overall costs, but it could also create a different problem that would lead to them eliminating programs with low enrollment due to cost barriers.
It’s also important to note that many of these definitions and rules are just proposed regulations; however, many of the regulations were dictated from the law created by the OBBB. Meaning, we do know what the loan limits are, but the definitions could be tweaked. We still need to wait to see the final regulations.
Program affordability
It’s always important to be strategic about your education, especially if you need to borrow student loans. The credential you are pursuing should offer a solid return on investment for your career path. If your graduate degree requires you to borrow $120,000, on top of your existing undergraduate debt, it may not make financial sense if you only expect to earn a salary of $75,000 upon graduation.
If the degree is worth the additional debt, you want to explore a variety of programs to compare costs. Since you will be more limited on federal student loan funds, you need to ensure you can cover the costs of the program you attend.
Understand your program level
Credentials may be deceiving as the regulations offer a specific list of programs which are considered “professional” level programs. For example, if you are pursuing a doctorate program in Physical Therapy, according to the proposed regulations, you will only be eligible for loans at the graduate level. These classifications are for financial aid purposes only, and your school cannot change your program level to qualify you for the higher loan limits.
Hunt for scholarships, grants, fellowships, and assistantships
At the graduate level, scholarships, grants, fellowships, and assistantships are all opportunities to help you cover the costs of your program. Look at opportunities at your school, as well as private resources. While fellowships and assistantships offer stipends which may not cover all your costs, it can help reduce the amount of student loans you need to cover the costs of your program.
Understand Your Private Student Loan Options
If you need to fill a financial gap, you may want to consider a private student loan. It’s best to compare rates and find lenders that offer strong borrower benefits and competitive interest rates. While it’s easy to think of the big names in lending, don’t forget to check the offerings of credit unions. Many credit unions offer competitive rates, with strong borrower benefits to their members.
Credit Union Grad School Solutions
If you’re looking for a convenient way to cover grad school funding gaps, check out the private student lending options from our leading credit union partners. We’ll match you with credit unions that provide flexible, reliable solutions to help cover costs – regardless of the changes coming to federal student loans.
