Nursing is once again removed from the federal list of professional degrees.
Nursing has been removed from the federal list of professional degrees, impacting student loans. Advocates are calling for change amid a nursing shortage.
While many Americans see removal from the Department of Education’s (ED) list of “professional” graduate degrees as a loss of status and access to higher education, others see it as an opportunity to finally curb ballooning student loan debt.
Last month, the Trump administration updated which majors fall under the definition of a “professional” degree to qualify for higher student loan limits. Only 11 people were shortlisted, and many were quick to point out that degrees such as nursing, accounting, architecture and physical therapy were excluded.
Critics said the proposed guidelines, which would have to go through a comment period before being finalized early next year, would leave people unable to afford to work in excluded occupations.
However, some lenders say this floor, coupled with ED’s elimination of unlimited Graduate PLUS loans for cost of attendance and lowering the limit on Parent PLUS loans, could ultimately lead to reductions in student loans for many borrowers. If students have to think more about their budget and the cost of getting a degree, and fewer people enroll in expensive schools, debt will decrease. High-cost schools may need to find ways to lower fees to compete, they say.
This idea is based on the Bennett hypothesis. In 1987, former Secretary of Education William J. Bennett suggested that: Increased federal student aid will allow universities to raise tuition fees This is because the grant covers the student’s expenses.
So while it may hurt to hear that your degree doesn’t qualify you as a “professional,” some experts said it’s less about your career status and more about how much you can borrow from the federal government.
And Jack Wallace, director of private student loan company Illefi, said most students studying in non-eligible professions are currently not borrowing more than the maximum amount.
Which degree qualifies me as a specialist?
If finalized, effective July 1, “professional” degrees eligible for federal student loan limits of $50,000 per year and $200,000 over a lifetime would include:
- medicine
- pharmacy
- dental
- optometry
- law
- veterinary medicine
- osteopathic medicine
- Podiatry
- chiropractic
- theology
- clinical psychology
For degrees not included in the list, the loan limit is $20,500 per year and $100,000 for life.
What is the change in “professional”?
Professional associations such as the National Association of State Boards of Accountancy and the American Association of Colleges of Nursing opposed ED’s claims that their work was unprofessional.
“Classifying accountants as anything other than professionals fundamentally misrepresents the important work that[CPAs]do, which is responsible for the health of the global financial system on which businesses and individuals depend,” said Daniel J. Dustin, NASBA President and Chief Executive Officer.
Professional associations and some members of Congress are also concerned that lowering the loan limits for these degrees will discourage students from entering these fields.
This classification “undermines the ability to fund the education of nurses, physical therapists, occupational therapists, social workers, public health workers, mental health counselors, and other essential health care workers,” wrote Rep. Timothy Kennedy (D-N.Y.) in a letter to the Education Department, signed by 69 of his colleagues in Congress, opposing the exclusion. The move “will exacerbate existing workforce shortages and place further strain on a health care system already in crisis.”
Some experts agree that loan limits will encourage people who can’t cover the costs of certain programs to consider cheaper options or consider private loans that can offer lower fees and interest rates.
However, statistics show that many students seeking graduate degrees who are considered “non-professionals” may not be deterred by the loan cap because they typically borrow below the annual loan limit.
For example, 95% of nursing students did not meet the $100,000 limit, the ED said. According to Preston Cooper, a senior fellow at the American Enterprise Institute, a conservative think tank, 72% of students pursuing a master’s degree in social work (MSW) borrow less than the $20,500 annual limit for graduate programs, and 84% of Ed.D. students borrow within the standard limit.
This is in contrast to just 31% of medical students who borrow less than the standard graduate loan limit of $20,500 per year, he said.
“I’m skeptical that loan limits will have much of an impact on enrollment in professions like nursing,” said Kathryn Meyer, a fellow at the center-left Brookings think tank.
But “that doesn’t mean there aren’t consequences. There are definitely people who decide not to become nurses because the program they were interested in is expensive and they can’t move to another part of the country to get into a lower-cost program, or the lower-cost school might not be able to expand enrollment,” Meyer said.
The proposed changes may have other negative effects. “In fact, my biggest concern is for students who are actually enrolled in programs that are on the professional list, but the increase in the professional program cap is still not enough to compensate for the elimination of the PLUS loan,” Meyer said. “Despite being on the professional list, aspiring dentists are far more likely to not have access to federal financing sufficient to cover program costs.”.
How will the changed classification curb student debt?
Some experts said stricter classifications and loan caps could force schools to rein in costs.
“Because kids can rent what they want, schools can charge what they want, which drives up costs,” Wallace said.
While general inflation has fluctuated primarily between 2% and 4% over the past 45 years, tuition inflation has averaged between 7% and 8% annually. According to the Higher Education Price Index, general consumer prices have nearly doubled since the 1980s, while tuition fees have more than tripled.
“We’ve created an education bubble that’s like the mortgage crisis,” laments Dan Rubin, CEO of YELO Funding, which provides school loans. “For 40 to 50 years, people could borrow as much as they needed or wanted for their education, easily credited, easily loaned money.”
Higher education in the United States is the most expensive of all Organization for Economic Co-operation and Development (OECD) countries, according to data.
“In other countries, you’re getting an education at a much lower cost,” Rubin said. “The issue is the price, not how much you can borrow. We need to reconsider the cost of education.”
If fewer people can afford tuition, schools may have to reconsider their fees, they said.
However, some argue that federal loan limits alone may not lower tuition costs, as many factors determine costs.
“Changes in state funding are an important factor in explaining the rising costs,” the centrist Bipartisan Policy Center said. Some researchers estimate that state spending cuts account for about 41% of the increase in tuition revenue since the Great Recession began in 2007.
Schools may also shift costs between programs to maintain revenue, Meyer said.
“Some high-cost programs will try to bring costs down,” she says. “But at the same time, we may increase tuition rates in other historically low-cost graduate programs to offset the loss of revenue.”
In a simplified example, the school nursing program costs less than the loan limit, but the physician program costs more. The school can supplement its income by lowering the price of medical degrees to the loan limit and increasing the price of nursing degrees to the loan limit.
Wallace and Rubin said they hope schools will choose to go back to basics and reduce costs by focusing solely on education.
“When I visited the university, I was outraged by where the money was being spent,” said Rubin, whose three children are in higher education. “The facilities looked like a five-star hotel. Why? We are here to get an education. This is not a resort. This is a university.”
No limit on federal borrowing for graduate programs, Schools had no incentive to cut costs, he said. But now, “I finally have hope for the future.”
Medora Lee is USA TODAY’s money, markets and personal finance reporter. Please contact us at mjlee@usatoday.com. Subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday to Friday morning.
