The Federal Loan Change Landing July 1 Could Shrink Your Profession’s Pipeline

What’s Gone, What’s Capped, and Where Counseling Lands

The Graduate PLUS program currently lets students borrow up to the full cost of attendance, however high that runs for their program. That flexibility disappears for new borrowers on July 1. Under the One Big Beautiful Bill Act, signed July 4, 2025, most graduate programs are now capped at $20,500 a year and $100,000 total in federal loans.

There is a higher tier ($50,000 a year, $200,000 aggregate), but you have to qualify as a “professional degree.” The Department of Education issued a final rule on April 30 naming eleven programs that qualify: chiropractic, clinical psychology, dentistry, law, medicine, optometry, osteopathic medicine, pharmacy, podiatry, theology, and veterinary medicine.

That’s the list. Master’s-level counseling is not on it. LPC programs, LCMHC programs, school counseling degrees, career counseling degrees. None of them made the cut. Neither did social work, nursing, physical therapy, or speech-language pathology. The average cost of attendance for graduate counseling programs already runs above $30,000 a year. That’s a $10,000-per-year gap that now has to come from private loans at market interest rates, family support, or it simply isn’t covered.

“The programs most at risk of failing the accountability metric are those where the cost of the education exceeds early career earnings, particularly in mental and social health services [and] counseling.” National Association of Independent Colleges and Universities (NAICU)

There’s a Second Layer: Programs Could Eventually Lose Federal Loan Access Entirely

The OBBBA also creates something called “Gainful Employment for All.” Every graduate program will now be measured against whether its graduates out-earn the median bachelor’s degree holder in their state, four years after finishing. Fail that test twice in three years, and the program loses federal loan eligibility for at least two years.

This is where the deeper threat sits. Counselors know the salary reality: an LPC or LCMHC starting in a community mental health role might earn $42,000 to $50,000. In states where bachelor’s graduates earn similar wages, a master’s counseling program could fail this test, repeatedly, and eventually lose the ability to offer federal loans to students. Enrollment drops. The pipeline shrinks. The shortage deepens.

HHS projects a national shortage approaching 100,000 mental health counselors by 2038. As of this month, 106 million Americans live in a Primary Care Health Professional Shortage Area. On May 19, New York Attorney General Letitia James led a coalition of 25 states and the District of Columbia in suing the Department of Education, arguing these restrictions will make workforce shortages worse. The July 1 date has not moved.

This field is needed. The people in it are doing real, difficult, necessary work. Work that pays in people’s lives, not just paychecks. But the people who want to follow you into it need to be able to afford the credential first.

Sources

• Frequently Asked Questions About the One Big Beautiful Bill Act — National Association of Independent Colleges and Universities (NAICU)
• Fact Sheet: Federal Student Loan Limits for Graduate and Professional Programs — American Hospital Association, May 2026
• One Big Beautiful Bill Act NSLDS Eligibility Processing Updates — U.S. Department of Education Federal Student Aid, 2026
• Lawsuit Filed by 25 States, D.C. Claims New Federal Student Loan Limits Would Harm Health Care Workforce — AHA News, May 2026
• States Sue Over New Student Loan Limits on Certain Nursing and Healthcare Degrees — NPR, May 2026
• Attorney General James Sues to Stop Student Loan Cuts for Future Health Care Workers — New York Attorney General, May 2026
• 25 States Sue Ed Department Over Grad Student Loan Limits — Inside Higher Ed, May 2026