Understanding new federal student loan limits and what it means for occupational therapy

In July, the President signed H.R. 1, commonly known as the One Big Beautiful Bill Act, which made a number of changes to federal financial aid for higher education. One of the changes that is the most impactful for occupational therapy was the elimination of the Grad PLUS loan program, leaving post-baccalaureate students with only one federally administered borrowing option, the Direct Unsubsidized Loan program. The bill also sets new loan limits for the Direct Unsubsidized Loan program. For programs defined as graduate programs, students may borrow $20,500 per year up to a lifetime cap of $100,000. For programs defined as professional programs, students may borrow $50,000 per year with a lifetime cap of $200,000.

This loan program, sometimes referred to as Stafford Loans, has had annual and lifetime loan limits since 1998. This limit has always depended on whether the program was classified as professional or graduate. Policy makers understood some degree programs, such as medical programs, were among the most expensive, resulting in a higher lifetime limit for degree seeking borrowers. When this cap first went into place, the list of professions that were considered professional programs was set to just ten: pharmacy, dentistry, veterinary medicine, chiropractic, law, medicine, optometry, osteopathic medicine, podiatry, and theology. However, this definition had little impact on borrowers as the Grad PLUS program provided additional federal loan options for students enrolled in post-baccalaureate programs defined as “graduate programs”. Because it did not have a real impact on students’ ability to receive federal loans, this list went unchallenged.

Are Master’s and Doctoral Occupational Therapy Programs Considered Professional or Graduate Degrees Under H.R. 1?

H.R. 1 seemed to set a broad definition for which degrees should be considered professional, using language in regulations defining these degrees as ones where “professional licensure is also generally required.” During negations on the bill, Congressional offices communicated that they intended the definition to include a wider range of post-baccalaureate health professions that required licensure. The Department of Education (ED) began the process of updating higher education regulations, as required by H.R. 1, through a negotiated rulemaking process in early October. These meetings included recommending changes to the existing regulations to ensure federal student loans comply with H.R. 1.

Despite public comments from AOTA, occupational therapy (OT) post-baccalaureate programs, and other health professions that are not currently listed as professional degrees, the negotiating committee made no changes to the historical list. The committee recommended one change that kept the definition open to future changes. New language explicitly states that the Secretary of Education has the authority to add new professions to the “professional programs” list. However, any addition would require another separate negotiated rulemaking process, and no such process is planned to date.

What’s Next?

As of the date this article was published, both master’s and doctoral OT programs are not considered professional degree programs. The negotiated rulemaking process isn’t complete, and the next time the negotiating committee will convene is in early November. Several questions remain.

These limits go into effect on July 1, 2026, and any student borrowers with Grad PLUS loans are allowed to continue to receive those loans for up to three academic years. However, ED hasn’t clarified if that means students must be accepted, enrolled, or have borrowed from the Grad PLUS program by that date. Additionally, other than the date of the next negotiating rulemaking, ED has not announced any future actions, including the agenda for that meeting, or if ED plans to begin the process to add additional professions to the list.

AOTA led the creation of a broad coalition of over 40 national organizations to advocate that ED use the broadest list of professional degrees, as we believe was the intent of Congress. We are continuing to work with ED, Congressional champions, and coalition partners to obtain clarification and urgent regulatory changes before this policy causes serious long-term damage to the profession.

Your help is critical in this moment, so please use AOTA’s legislative action center to write to your Members of Congress and urge them to help protect the OT workforce.