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.
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:
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.
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:
This classification is:
It is strictly a loan-eligibility category used for federal aid administration.
MD / DO – Medicine
DDS / DMD – Dentistry
JD – Law
DVM – Veterinary Medicine
OD – Optometry
PharmD – Pharmacy
Professional theology degrees (e.g., MDiv)
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.
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
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
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.
| Category | Graduate Student | Professional Student |
|
Basic Definition |
A student enrolled in a program that awards a graduate credential other than a professional degree |
A student enrolled in a first professional degree program |
|
Examples of Programs |
MBA, MS, MA, MPH, PhD, EdD, graduate certificates |
MD/DO (Medicine), JD (Law), DDS/DMD (Dentistry), DVM (Veterinary), OD (Optometry), PharmD (Pharmacy), MDiv |
|
What this is Not |
Not a professional degree, even if advanced or prestigious |
Not “any graduate program” |
|
Pre-OBBBA Understanding |
Treated as graduate-level for loan eligibility |
Treated as a distinct category with higher loan limits |
|
What Changes Under OBBBA |
Subject to new and more restrictive federal loan borrowing limits |
Retains separate loan limits, but still subject to OBBBA caps |
|
Direct Unsubsidized Loan Limits |
Lower than professional students; now more tightly capped |
Higher than graduate students, but not unlimited |
|
Aggregate Loan Limits |
Lower aggregate caps |
Higher aggregate caps |
|
Why the Distinction Matters |
Determines how much a student can borrow under federal loans |
Determines eligibility for higher federal loan limits |
|
Is this About Prestige or Career Path? |
No |
No |
|
What Drives this Classification |
Program type and credential awarded |
Program type and credential awarded |
| Student Type | Loan Type | Pre-OBBBA (Through 2025-26) | OBBBA (2926-27 and Forward) | What Changed |
|
Graduate Student |
Direct Unsubsidized - Annual |
$20,500 |
$20,500 |
No Change |
|
Direct Ubsubsidized - Aggregate |
$138,500* (Combined UG + GR) |
$100,000 (graduate borrowing only) |
Reduced aggregate cap |
|
|
Graduate PLUS |
Up to COA |
Eliminated |
Graduate PLUS no longer allowed |
|
|
Lifetime Borrowing Limit (Total)** |
Effectively uncapped beyond aggregate |
$257,500 |
New lifetime cap introduced |
|
|
Professional Student |
Direct Unsubsidized – Annual |
$20,500 |
$50,000 |
Annual Limit Increased |
|
Direct Unsubsidized – Aggregate |
$138,500* (combined UG + GR/PRO) |
$200,000 (professional borrowing only) |
Higher but capped |
|
|
Graduate PLUS |
Up to COA |
Eliminated |
Graduate PLUS no longer allowed |
|
|
Lifetime Borrowing Limit (Total) ** |
Effectively uncapped beyond aggregate |
$257,500 |
New lifetime cap introduced |
* 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
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.