A provision in President Donald Trump’s One Big Beautiful Bill has barred federal student loans for degree programs whose graduates did not meet new earnings thresholds.
It also has imposed new lifetime borrowing caps for graduate and professional students, a move that analysts and educators said could change which fields students choose to pursue.
Why It Matters
Federal student loans have been a primary financing channel for millions of students, and tightening eligibility based on post-graduation earnings could narrow program access and influence career paths.
Nearly 6,000 institutions provide federal loans and 30 percent to 40 percent of undergraduates borrow federally each year, representing roughly 7 million students who rely on federal loans, according to Forbes.
What To Know
The law, signed last month, requires undergraduate programs to show graduates’ median earnings exceeded state median earnings for 24- to 35-year-olds with a high school diploma, and it required graduate and certificate programs to exceed the state median earnings for bachelor’s degree holders in the state.
“Sounds reasonable, right? Here’s the problem: It completely ignores the market reality that many essential careers pay poorly not because they lack value, but because they’re undercompensated,” Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek.
“This creates a feedback loop. Fewer people can afford to study education or social work, so we get teacher shortages, which will drive up demand, which eventually increases wages. But only after years of crisis.”
The legislation also sets new borrowing caps for graduate students, including a $100,000 lifetime cap for graduate loans and a $200,000 lifetime cap for professional degree borrowers, and it phased out Grad PLUS for new borrowers starting July 1, 2026.
Early childhood education leaders warned that the earnings threshold could shut off loan access for many early-childhood programs and deter prospective teachers amid staffing shortages in child care, according to PBS NewsHour.
