Budget Reconciliation Law Impact on PA Education
On July 4, following several months of congressional deliberations, President Donald Trump signed the One Big Beautiful Bill Act (OBBBA) into law. This sprawling domestic policy legislation, passed narrowly as part of the budget reconciliation process, extends the income tax reductions initially enacted as part of the 2017 Tax Cuts and Jobs Act, financed through significant social spending reductions. As part of the package, Congress included large-scale changes to the federal student loan program in a manner which will significantly impact how students, particularly those in graduate and professional programs, finance their education.
Prior to the enactment of the OBBBA, PA students received financial aid through a tiered borrowing mechanism, with the ability to borrow up to $20,500 annually – the same amount available to non-health professions graduate students – through unsubsidized Stafford loans. Under this structure, other health professions students such as medical and dental students were eligible for higher amounts exceeding $40,500 per year. Beyond this annual limit, students then were able to borrow the remainder of their cost of attendance through Grad PLUS loans at a slightly higher interest rate.
Under the OBBBA, Congress acted to eliminate this long-standing disparity between health professions students with all professional students, defined as those pursuing “a degree that signifies both completion of the academic requirements for beginning practice in a given profession and a level of professional skill beyond that normally required for a bachelor’s degree [with] professional licensure [also being] generally required,” capped at borrowing up to $50,000 annually along with a phase-out of Grad PLUS loans beginning for students matriculating after July 1, 2026. Under the law, students that have already matriculated will continue to be able to borrow Grad PLUS loans through the completion of their program.
Following the transition, professional students will have access to an aggregate amount of federal graduate loans of up to $200,000 depending upon the number of federal financial aid years in which they complete their programs. For any financial aid needs beyond this limit, private student loan options will continue to exist along with alternate financing mechanisms.
While the OBBBA includes significant federal student loan changes, the final legislation excluded changes previously under consideration that would have negatively impacted PA education. For example, the bill preserves the Public Service Loan Forgiveness program, a critical incentive for faculty recruitment at non-profit institutions of higher education, as originally authorized.
As policymakers considers further legislation impacting higher education during this Congress, PAEA thanks all advocates for their continued engagement in the Association’s advocacy efforts to support the future health workforce and will continue to advocate for full access to the financial aid students need to complete their education. Members and students with questions are invited to contact Chief Policy Officer Tyler Smith at tsmith@PAEAonline.org.
