Graduate and Professional Student Definitions for OBBBA

Among many other changes introduced in the One Big Beautiful Bill Act (OBBBA), there are going to be new regulations for federal loan borrowing that become effective on July 1, 2026.

As higher education institutions navigate these changes to how loans are structured, it's important to understand the exact definitions of the students they impact: graduate students and professional students.

Here's a closer look at the definitions of these two student groups and how they're classified under the new legislation.

Graduate Student

A graduate student is a student enrolled in a program that awards a graduate credential, other than a professional degree, upon completion. Common examples of graduate programs include:

• MBA
• MS, MA, MPH
• PhD, EdD

• Graduate certificates 

These programs are academically advanced but are not considered professional degree programs under federal financial aid rules.  

Most graduate students fall into this category. 

Professional Student

A professional student is a student enrolled in a first professional degree program — not a program that simply sounds advanced or prestigious.

Under federal regulations, professional degrees are specifically recognized programs, not broadly defined graduate programs. 

The federal government uses the professional student classification to determine:

• Higher Direct Unsubsidized Loan limits
• Higher aggregate loan limits
• Certain need-analysis and packaging rules

This classification is:

•  Not about prestige
• Not about career outcomes
• Not about program difficulty

It is strictly a loan-eligibility category used for federal aid administration.

Programs That DO Qualify As Professional Degrees: 

• MD / DO – Medicine 

• DDS / DMD – Dentistry 

• JD – Law

• DVM – Veterinary Medicine

• OD – Optometry

• PharmD – Pharmacy

• Professional theology degrees (e.g., MDiv) 

Programs That DO NOT Qualify: 

• MBA

• MS, MA, MPH 

• PhD / EdD

• Certificates

• Any non–first professional program 

In other words, if it is not a first professional degree, it is not a “professional student” under this regulation — period. 

What Changed With OBBBA (and What Didn’t) 

Although there will be many changes introduced when the new legislation goes into effect, not everything will be changed. 

For example, here's what will stay the same:

• The CIP code designations of graduate and professional programs

• Graduate program academic year caps

What is changing starting July 1, 2026, is that OBBBA will use these definitions to apply new federal loan borrowing limits.

• Graduate PLUS loans eliminated

• Graduate program aggregate caps

• Professional program academic year and aggregate caps

The distinction now has greater financial impact, even though the definitions themselves did not change. For more details on these changes, visit our OBBBA Resource Hub.

Direct Loan Limit Impact Summary 

 

* Pre-OBBBA aggregate limits allowed graduate/professional borrowing beyond the undergraduate cap, effectively enabling continued borrowing through Graduate PLUS. 

** Lifetime limit includes combined undergraduate + graduate/professional borrowing, excluding amounts repaid, forgiven, discharged, or cancelled. 

Data source: NASFAA “2026–27 & Beyond Graduate/Professional Student Loan Borrowing Limits” chart 

The Bottom Line

Here's what's staying the same:

• Graduate students still have a $20,500 annual Direct Unsubsidized limit

• Undergraduate loan limits are unchanged

What's changing significantly:

• Graduate PLUS loans are eliminated

• Hard lifetime borrowing caps now exist

• Graduate students now have a lower aggregate cap ($100,000)

• Professional students now have:

  • A much higher annual limit ($50,000)

  • A higher aggregate cap ($200,000)

• Both groups are capped at a $257,500 lifetime maximum 

Before OBBBA, schools could rely on Graduate PLUS to fill COA gaps. However, starting in 2026–27, that safety valve is gone. Moving forward, systems must enforce annual, aggregate, and lifetime caps and program classification (graduate vs professional) directly determines how much a student can borrow.

This is no longer just a compliance nuance — it materially affects packaging.

For more details about the changes under OBBBA, upcoming webinars and events with expert insights, and additional content that's designed to help you navigate these changes, visit our OBBBA Resource Hub.