Graduate Loans Should Reflect Graduate Earnings 

A few months ago, I grabbed my phone on a Friday night, seeking some light, mindless celebrity drama. Instead, the first headline I saw on People.com: “Donald Trump’s New Bill Doesn’t Classify Nursing as a ‘Professional’ Degree for College Students, Sparking Outrage.” So much for getting away from my work in education policy. 

It’s rare for wonky legislative details to break into the public consciousness in such a big way. But that’s what happened when higher education reforms in last year’s One Big Beautiful Bill Act had a game-changing impact on graduate student loan rules—most virally for nursing programs. 

I see why some might find the narrative irresistible. Nurses were our frontline workers during the pandemic, caring for patients under extraordinary pressure and risk. It’s not surprising that headlines suggesting a law had downgraded their profession would spark anger.  

But this episode is a cautionary tale about getting caught up in a populist narrative that’s strong on outrage but low on nuance. The backlash reflects a misdiagnosis of the real policy problem: the previous graduate lending program enabled uncapped borrowing and fueled excessive tuition growth. The flap over graduate nursing loans overlooks better solutions to the public’s anxieties about education and economic advancement. A better way forward starts with a simple question: How much debt can graduates of a program afford to repay? 

What changed. First, the changes really are a big deal. The law eliminated Grad PLUS, the program that, for two decades, let graduate and professional students borrow any amount up to the full cost of attendance (as determined by the college, which pocketed the revenue from those loans). 

For example, the University of Southern California’s online Master of Social Work program is notorious for charging more than $100,000 for a degree in a field where the typical graduate earns roughly $60,000 a year. When Grad PLUS existed, students could borrow the full cost of attendance, then spend potentially 20 years in income-driven repayment (with their debt load ballooning every year) until the debt was finally forgiven. That cost the government money and often kept the borrower from making other important investments, like buying a house.  

In its place, the new bill relies on capped Direct Unsubsidized Loans, with higher limits for programs Congress labels “professional” and lower limits for other graduate studies. The result: some students can still borrow substantially more, while others face much tighter ceilings. 

Why nursing became the symbol. Federal law and regulations have classified some graduate-level programs as “professional” for decades. This is purely an administrative category, based on characteristics such as degree length rather than any value judgment about a program’s merit. Nursing master’s degree programs are not—and never have been—part of that group. 

After the new legislation was enacted, an Education Department committee of colleges, students, and other experts agreed—unanimously—to keep the longstanding regulatory definition of “professional” programs largely intact, adding only a few programs, such as clinical psychology. Medicine and law were already on the list, but not nursing (or teaching or social work). Outrage ensued. Headline writers couldn’t resist framing this as a slap at nurses by heartless Republicans. 

Why it changed. The changes to graduate school loans that Congress made responded to a glaring problem. Graduate and professional school debt accounts for 46 percent of all federal student loan dollars, even though those students represent only 21 percent of borrowers. After Grad PLUS loans were created, institutions raised prices by 75 cents per additional dollar of average federal borrowing, a 2023 National Bureau of Economic Research study found. And those degrees don’t reliably pay off. Universities turned fast-growing master’s programs in fields like film studies and acupuncture into cash cows despite notoriously low return on investment for students.  

This mismatch between what students can borrow and what they can expect to earn is the core problem Congress was trying to address. That’s why lawmakers eliminated Grad PLUS and set annual loan limits: $50,000 for “professional” fields like medicine and law; $20,500 for other graduate programs. 

The nursing controversy is understandable, but it’s misleading and distracts us from pursuing even better approaches to address the grad school debt crisis and get nursing students the loans they need. The real issue isn’t whether a particular field is labeled “professional”—it’s whether federal loan policy is designed coherently. Lawmakers were right to recognize the need for caps on graduate student loan debt. But they chose too blunt an instrument. Categorical distinctions predictably invite fights over which programs qualify for higher borrowing limits.  

A better solution would tie field-specific loan limits to typical earnings outcomes for graduates. This could also have helped prevent the outrage: As the Monthly pointed out, nursing programs stand out for having strong debt-to-earnings ratios and, of course, clear social value. A performance-based framework moves the debate away from divisive classifications and toward a durable solution grounded in economic reality. 

How performance-based loans would work. A return-on-investment approach would apply a debt-to-income ratio to establish loan ceilings for graduate students. The government uses similar metrics in income-driven loan repayment and accountability rules. By reverse-engineering, the Education Department could determine the average earnings of graduates in specific fields, then cap the debt that students in those fields could assume. 

This strategy protects students by setting loan limits, so a typical graduate’s payment doesn’t exceed, for example, 20 percent of their income. Instead of getting sidetracked by a debate over who is a professional, borrowing authority would be tied to expected earnings. There would be no perceived value judgments, just straightforward calculations. That would force schools to deliver value, since only programs in fields with strong wage outcomes would qualify for higher caps. Occupations where graduates typically earn around $150,000 annually could sustain substantially higher borrowing than fields where average salaries are closer to $75,000. 

This approach differs in crucial ways from existing across-the-board income-driven repayment programs that subsidize debts on the back end. An ROI framework would address unmanageable debt on the front end by preventing students from taking on debt they can’t repay. It isn’t indifferent to the social value of fields like teaching or social work—but it pushes us to address that problem more directly. Instead of saddling students with unrepayable debt, the government should push institutions to lower the cost of programs that matter to the community but don’t pay well. We could also take on the bigger challenge of raising wages in those professions rather than placing such a heavy burden on workers themselves. 

As for those master’s programs with consistently weak earnings outcomes, it’s reasonable to ask why they should receive unlimited federal loan support. Colleges may choose to offer these degrees, and students are free to pursue them. But there’s really no good reason the government should devote endless student loan dollars to these graduate programs. 

Ensuring public buy-in for education spending means protecting taxpayers from shouldering the costs of over-the-top graduate borrowing. Return-on-investment graduate loans preserve public support and set guardrails on effectiveness without hurt feelings and public outcry. Do that, and the political will to give students meaningful education and career opportunities will follow. 

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