Brendan Farley |
When The One Big Beautiful Bill Act (OBBBA) became law this summer, it imposed new limits on how much graduate students can borrow — while also eliminating the federal Grad Plus Loan program and instituting borrowing caps for post-baccalaureate degrees. The intent of these changes is to reign in the growing student debt associated with graduate programs. Supporters believe that loan caps will force educational institutions to lower their tuition prices.
Now, as the Department of Education begins defining which degrees qualify for expanded loan caps, employers — particularly healthcare employers — face urgent questions about how these changes will reshape their talent pipelines. Here’s what you need to know as the department’s rulemaking process unfolds.
As federal loan limits shift, healthcare organizations may see new patterns in enrollment, specialization, and career pathways.
What’s changing
In late November, the Department of Education issued preliminary guidance on which graduate programs will qualify as “professional” under the OBBBA. The update modestly expands the existing list and is still subject to change through the ongoing rulemaking process. A formal Notice of Proposed Rulemaking is expected in January 2026, followed by a 30-day public comment period, with final rules targeted before July 1, 2026. The key things to know:
Federal loans for “Professional” degrees will be capped at $50,000 per year with a $200,000 lifetime cap. All other graduate degree borrowing will be capped at $20,500 per year with a $100,000 lifetime cap.
The OBBBA introduced a narrow definition of “professional” degrees that was initially limited to 10 professional fields including medicine, pharmacy, dentistry, law, and theology. During the initial rulemaking process, clinical psychology was added to the list.
Of note, “professional” degrees do not include Advanced Practice RNs, Physician Assistants, Physical Therapists, and Occupational Therapists. Some stakeholders have raised concerns about the negative impact this will have on the pipeline for critical healthcare roles.
Why it matters
The elimination of the Grad PLUS Loan program and new borrowing caps could create a substantial funding gap for students in high-cost fields like nursing and physical therapy. Without intervention, funding for the workforce pipeline will shift toward higher-interest private debt, threatening the financial viability of advanced clinical careers. The regulatory changes could also create a two-tiered system that disadvantages several critical clinical roles.
Graduate loan constraints: The new loan limits, which cap annual borrowing for graduate degrees at $20,500, are projected to impact 26% of all graduate students, according to an analysis by Georgetown University Center on Education and the Workforce analysis of data from the Department of Education.
Although most borrow less than the new limit, the impact varies by program. For example, while the median annual borrowing for a graduate nursing degree is $18,400, the top 10% of borrowers in these programs borrow over $33,500, significantly exceeding the new annual cap, according to the Postsecondary Education & Economics Research Center (PEER).
Acute impact on part-time learners: The new loan limits will be prorated for students attending less than full time based on the number of credits they complete each year. An analysis done by PEER center estimates that over 60% of part-time borrowers at the master’s level could be impacted by these new loan caps.
The private market shift: Students currently rely on federal loans to cover costs; the new caps will force some into the private market, where they lose protections like Income-Driven Repayment (IDR) and Public Service Loan Forgiveness (PSLF). This shift increases the risk of financial distress, especially for students without established credit or high family wealth.
The financial penalty: ProtectBorrowers.org estimates that a student forced into private lending to bridge this gap will pay an additional $10,885 in interest, increasing the already substantial financial debt held by these workers.
In essence, the new caps will push a large segment of graduate student borrowing from a standardized, relatively low-risk, and flexible federal system into a high-risk, credit-dependent, and less protective private market. This will translate into higher debt burdens and greater financial risk for the next generation of advanced degree holders.
Headwinds for rural healthcare & a diverse workforce
The exclusion of advanced nursing from the "professional" classification poses a threat to staffing rural healthcare facilities and enrolling students from diverse backgrounds.
The specialty trend: Student debt is a documented factor in a healthcare professional’s choice of specialty and practice location.
Potential shifts:
Specialty alignment: Higher debt burdens may encourage graduates to prioritize higher-wage specialties over primary care roles in order to manage increased private loan obligations.
Geographic distribution: Financial pressures from high student debt can undermine the incentives for healthcare professionals to practice in rural, non-urban settings.
Access & diversity: Reliance on private financing, which often requires established creditworthiness or sufficient family wealth, will present barriers to entry for students from lower-income or working-class backgrounds.
The need to aggressively pay off private debt will often override the compelling need to serve in high-demand specialties and rural healthcare locations.
Given these shifts, healthcare employers may need to reassess which incentives resonate most with emerging clinical professionals
Impact on recruitment incentives
The shift toward private lending diminishes the utility of Public Service Loan Forgiveness (PSLF) as a talent attraction & retention tool for non-profit healthcare providers.
Loan eligibility limits: PSLF is exclusively available for federal Direct Loans. Private loans do not qualify and cannot be consolidated into eligible federal loans.
Diminished public service incentives: For healthcare professionals holding significant private debt, the financial benefit of a 10-year public service commitment will be reduced. This could especially impact healthcare organizations operating in rural areas looking to attract graduate talent.
Strengthening the full talent pipeline
Leading healthcare providers will view these risks as an opportunity to strengthen their future clinical pipeline from entry-level roles all the way to advanced practitioners.
Healthcare leaders should consider a multi-pronged approach that both addresses the direct risk for recruiting and retaining graduate level talent and enables the development of internal talent through debt-free career pathways.
1. Policy advocacy
Professional degree definition: Encourage the Department of Education to expand the "Professional Degree" definition to include licensed health professions like NPs and PAs. The Department of Education will post their final decision in early 2026 which will allow for public comments for 30 days before issuing their final rule. There is widespread support for changing the definition among nursing professionals and advocates.
2. Creating new talent pipelines
Tuition assistance mitigates risk: Employer-funded education benefits bypass the federal borrowing cap entirely, ensuring the employee never needs to originate a loan for tuition. Strategic employers taking a long-term view will see the advantage of leveraging tuition assistance for both entry-level and advanced roles. Guild, for its part, has enabled healthcare learners to save more than $575M in tuition costs for education and skill programs.
Focus on internal mobility: Targeting these investments toward existing staff (e.g., BSN to MSN, RN to BSN pathways) leverages known talent, significantly reducing recruitment costs and turnover risk compared to external hiring. On average, Guild Healthcare learners are 2.9x more likely to experience internal mobility within their companies compared to colleagues who do not leverage the Guild benefit.
Competitive differentiation: As debt becomes more expensive and risky, an employer-funded, debt-free education pathway becomes a primary workforce development driver rather than a passive education benefit. Healthcare employers see an average $3 savings for every $1 invested in education and upskilling through Guild.
3. Promoting financial wellness
Financial coaching: For existing employees who are already struggling with student debt, employers should consider providing access to certified financial coaches who can help each individual through their unique circumstances.
PSLF engagement: Employees should be encouraged and supported in their ability to take advantage of existing debt forgiveness programs; especially Public Service Loan Forgiveness.
A pivotal moment for the healthcare talent pipeline
As the Department of Education moves toward finalizing its definition of “professional” programs in 2026, we’re only beginning to understand the full implications of the One Big Beautiful Bill Act. What we know so far is clear: The new loan caps will push some graduate learners — especially those pursuing advanced clinical roles — into higher-risk private debt, tightening access to critical professions and adding strain to an already challenged healthcare pipeline.
In this moment, employers have an opportunity to lead by strengthening internal pathways, expanding debt-free education options, and staying engaged in the rulemaking process. With proposed rules expected early next year and final decisions slated for July, what happens over the next several months will shape whether these changes deepen workforce shortages or help accelerate a more sustainable, more equitable pipeline for the clinicians the system depends on.
