Financial Aid Admins Grapple With Last-Minute Loan Changes

National Harbor, Md.—With just one day remaining before graduate loan caps take effect, financial aid administrators who gathered Tuesday at the annual National Association of Student Financial Aid Administrators conference found themselves struggling to understand next steps.  

Although institutions have been preparing for July 1 for months, a court ruling late last week temporarily halting the Department of Education’s definition of “professional programs”—students in which can take out more federal student loans than other graduate students—threw a wrench into their plans. Guidance released late Monday further complicated the situation. 

In a session on graduate student loans at the Gaylord Hotel and Conference Center in Maryland’s National Harbor, financial aid administrators said that there was still significant uncertainty about what the guidance meant in practice. The guidance included a revised list of 29 programs that, under the court’s ruling, now count as “professional,” including nursing, physician assistant, physical therapy and others that ED had been widely criticized for excluding from its previous definition. Several other programs, such as theology, were struck from the list.

But confusion remains over whether institutions should extend to students in those newly listed programs the higher loan amounts or not. ED’s guidance encouraged institutions to limit loans for students in programs that are considered professional under the court order. Doing so could “mitigate potential disruption to student borrowers resulting from changes in program classification that may arise from the ongoing litigation.” 

Students in programs defined as professional can borrow up to $50,000 a year or $200,000 in their lifetime. Other graduate students will be limited to just $20,500 a year and $100,000 over all. (Graduate students could previously borrow up to a program’s cost of attendance.)

Colleges are already seeing an influx of questions about the court order and whether they’ll be allowed to take out higher loan amounts than they previously could. Heather Boutell, director of financial aid for the Vanderbilt University School of Medicine, said at Tuesday’s panel that she had already begun getting emails from audiology students—one of the programs that falls under the edited “professional” umbrella—requesting their loans be increased. She noted that the Education Department’s web page about the changes encourages students to contact their “institution to determine if this impacts you,” even though many colleges are still trying to understand the implications of the guidance.

Joan Bailey, director of financial aid for the University of South Florida’s health colleges, said there’s been confusion among her university’s administration, too.

“They don’t have the background that we have to understand the implication of what they’re seeing,” she said. “It was just like last week when the case got stayed; right away, program leadership was on it: ‘Oh, Joan, great news.’ [My response was] slow down, because we knew the department would challenge the ruling.”

Right now, Boutell said, Vanderbilt is taking a wait-and-see approach, with the university’s attorneys reviewing the guidance to develop next steps. (In the hours after the ruling came down, NASFAA advised institutions to do just that—consult their own legal counsel.)

In the morning’s opening session, Under Secretary of Education Nicholas Kent—who walked out to Europe’s “The Final Countdown”—restated that ED stands by its definition of “professional” versus graduate programs. 

“We will see this case through the merits, but we are pretty confident in our position,” he said, adding that he felt the judge had ruled based on a flawed understanding of the rule. “We have time … to really educate the court on how we developed this definition in a way where she might feel more comfortable moving forward.” 

NASFAA President and CEO Melanie Storey told Kent she appreciated ED putting out guidance. “This is an important interim piece—this came down [Thursday], so your weekend, also ruined,” she said. “That’s how that goes, sometimes. But [I] appreciate the speed to get information out.”

The new loan limits, which are replacing a decades-old policy that allowed graduate students to borrow up to the cost of attendance, are just one piece of a sweeping higher ed overhaul that takes effect today.

Congress passed the changes a year ago as part of the One Big Beautiful Bill Act, and the Education Department then spent months hashing out how all the policies will work in practice. The last piece of the puzzle—a new accountability measure that’s based on students’ earnings after college—was finalized this week.

Taken together, the loan caps, the earnings test and the expansion of the Pell Grant to cover short-term job training programs, among other new policies, are some of the most significant changes to federal higher ed policy in decades. The Trump administration say the new policies will make college more affordable, expand opportunities to access other types of education and ensure students’ investment in college pays off.

However, critics say the new policies have been rushed and could reduce access to higher education. In another Tuesday morning session on the student aid landscape post–July 1, Clare McCann, managing director of the Postsecondary Education and Economics Research Center at American University, pointed to the center’s research indicating that a total of $10 billion in loans will be affected by the changes.

“Our expectation is that the gap is so sizable and there are so many people who are going to experience those limits and not have the credit scores they need to be able to access private loans that are underwritten in traditional ways that there’s going to be a significant impact in access,” she said. “Just a massive, overnight shift.”

But Kent celebrated the changes as a long-needed reimagining of the whole student aid system during his hourlong fireside chat with Storey.

“I think the enormity of the moment cannot be overstated,” he said. “I think Congress gave us all—the department, everybody in this room, thousands of more financial aid administrators who are not here, college leaders, governors and the American people—a task to re-envision a better financial aid system that works more seamlessly, is more simple for borrowers across our great nation.”