OBBB and Education – March 5, 2026

To start this conversation is a revisit to an item buried in the One Big Beautiful Bill (OBBB) that directly targets institutions of higher education of just about every category and type. In an effort to be fair about this, some attention was given to what we are talking about here by mainstream media but one could also argue perhaps not enough given everything else in the bill.

This boils down to the addition of a degree tier and classification system, that will govern how and for how much someone can obtain with a federally backed loan to assist with the financial impact of obtaining a desired degree. An initial assessment suggests the language of the OBBB ends up as one of the largest reorganizations of student loans in the modern era.

All with the intention of forcing an aggregate shift, in both how higher learning institutions price and supply degrees and also the demand by students in obtaining them, entirely by no longer calling some professions one obtains a degree for as “professional.”

Let that sink in, the impact of this is the Federal Government creating a two-tiered classification system for all degrees obtained via a federally backed loan falling into two categories: Graduate Degree and Professional Degree.

History of Student Loans

Fair warning, it is f’ing ugly.

While there have been historical efforts by the Federal Government to nudge interest in certain degrees before, one might consider the language of the OBBB as historic in this regard. One example of this being the Public Health Service Act of 1978 introducing the Health Education Assistance Loan (HEAL) designed to assist with covering higher costs in obtaining certain medical and health degrees. One could argue that created a de facto tier system without calling it that. But the OBBB does, a literal classification system.

Later we will discuss who is impacted, first this ugly history and by using the a 30 year window from 1994 to 2024 to illustrate the mess made (awkwardly, there is some wide ranging estimation going on for 2025 to current.)

In just 2014 to 2024 for understanding the growth of total outstanding student loan balances (i.e. total student loan debt) we are looking at a jump from roughly $1.24 trillion to $1.78 trillion. Around a 44% growth. Scoping this out to 20 years shows 2004 at roughly $600 billion against the same $1.78 trillion, or roughly 196% growth (near tripling.) At 30 years this is much worse, going from roughly $187 billion to the same $1.78 trillion. That is about 850% growth, shy of a 9 fold increase in just 30 years.

As of 2026, the early numbers pushed this to $1.81 trillion ‘ish.

The point being that is a staggering level of growth for a single type of debt, backed by another dubious recognition happening in 2010. That year, student loan debt as a type of debt surpassed both total credit card debt and total auto loan debt taking hold of the 2nd rank in debt type in this nation. Only trailing to total home mortgage debt holding the top rank.

While there was some jockeying going on between total credit card debt and total auto loan debt from 2010 to 2017, but by 2017 total student debt was firmly established as the largest non-mortgage type debt in this nation by far. In recent years, say 2023 to current, total auto loan debt started making a come back but it still as of 2025 about $210 billion behind.

For perspective by using the 2026 $1.81 trillion estimate (again this varies by source.) The closest comparable nation to us is the United Kingdom at about $335 billion in total student debt, something like 18.5% of the US total. After that is Japan at about $70 billion, or just shy of 4% of the US total. A conclusion one may reach is there is no other nation on the planet that realistically compares to the US in regards to the total student debt this nation has racked up.

One last thing to keep in mind, for the purposes of this conversation, is the vast majority of student debt in the US is federal (public.) Meaning, federal loan accounts make up some 91% to 92% of the total outstanding student debt. Private loans make up the rest.

Keep that number in mind.

So, what did the OBBB do?

Specifically, the tier system introduced links to total loan limits.

Starting at the top tier, specifically called “Professional Degree” programs in the bill itself, borrowers are limited to $50,000 annually and a $200,000 aggregate (or lifetime) limit. Now, once this is all implemented, over the coming years, there are only 11 degrees considered professional. Specific fields of study: Medicine (MD), Dentistry (DDS/DMD), Veterinary Medicine (DVM), Chiropractic (DC/DCM), Law (LLB/JD), Optometry (OD), Osteopathic Medicine (DO), Pharmacy (PharmD), Podiatry (DPM), Theology (M.Div/MHL), and Clinical Psychology (PsyD/PhD.)

That is it, everything else is considered next tier down called “Graduate Degree” programs with borrowers limited to $20,500 annually with a $100,000 aggregate (or lifetime) limit. When we say everything else, we also include all other master’s and doctoral degrees not explicitly listed in the Professional category above. Trivial things like Nursing, Physician Assistants, Physical Therapy, Architecture, Engineering, Economics, History, MBA programs, Social Work, and also things like Education and Special Education.

All no longer considered “professional” in the eyes of the Federal Government (and arguably Republicans that pushed for this) as the same OBBB wipes out and removes access to the older Grad PLUS loans program for anyone going to any institution of higher learning starting with this fall’s freshman class (others that have that are sorta grandfathered in.)

Obtaining a student loan to cover up to the full cost of attendance for some of these 5 year degrees, master’s and doctoral degrees, for these critical economic and social functions of this nation will be gone.

As in, obtain a private student loan joining the club of roughly 8% to 9% that go that way or… do not go.

Think about that, going forward students will have roughly double the latitude with federal student loans so long as they go after Theology and Chiropractic degrees over Engineering or Education and Special Education degrees (examples.) There are still a good number of degrees out there that take more than 4 years to obtain, but this changes the likelihood of students who need a loan to bother obtaining them.

Giveth and taketh away…

The general argument from Republicans for doing this centers on ending the “blank check” of student borrowing via the Federal Government by prior programs and also forcing institutions of higher learning to lower costs.

On paper, or in the bubble either way, this concern seems legitimate be it a bit hypocritical as the Federal Government seemingly has no limits (another conversation for another time, on top of a few we have already had.) Anyway, above we talked about the astonishing explosion in growth of student loan debt in just the past 30 or so years. Seemingly with no end in sight, few to no controls, and no other nation dealing with something along these lines.

To explore this means going back to Parent PLUS Loan program established from the Education Amendments of 1980. Designed for reason, but altered with the Deficit Reduction Act of 2005 to then be called the Federal Direct Graduate PLUS Loan program. Cutting away some of the fat from the narrative, you could bottom-line this to say the purpose of the 2005 version removed the $18,500 per year limit from the 1980 version (that skips over a whole lot, but this is about perspective at the time and potential contribution to what we see today.)

Democrats were quick to criticize this, arguably with some points having more merit than others. Meaning, direct impact against more expected theatre.

Key criticism boils down to forced expansion of private lending putting stress on private markets to deal with borrower protections and exclusion from any future forgiveness efforts by future Congresses (restriction and regulation argument,) access restrictions to some of these degrees for those with less means (social and economic argument,) erosion of protections with OBBB removed repayment options (choice,) and ultimately equity concerns (arguably the identity politics argument.)

In fairness, much of Democratic criticism has merit with some elements easier to track over others. The issue for Democrats is they have little answer to the issues we face with mounting student debt, outside of throwing it at the Federal Government to squash with new spending or deferred payment collections. Whatever their plans, there is little else on the table from opposition to Republicans on this.

The argument of adding to deficits and debt notwithstanding, the ultimate concern we face, that the OBBB did not really address, is how the Federal Government classifies and handles student debt.

Meaning, student debt is “protected” from the perspective of the borrower entirely because of existing law, it is significantly more difficult to discharge than all other unsecure debt (like credit card debt, medical debt, etc.) Also unlike all other consumer debt out there, federal student loan debt has no statute of limitations on collection nor even limitations of how it is collected. Meaning, the government can continue to chase payment on that federal student loan debt, even with wage garnishment and/or tax refund seizure, for the life of the borrower. All without any court order whatsoever.

Plausible impacts to evaluate

This becomes more important.

From the above, the OBBB intentionally aims to alter how institutions of higher learning offer these degrees, structure the class order to obtain these degrees, and perhaps does something never done before in history. The concept of applying a value to the degree against the likely income over the life of the graduate with that degree. More than on paper, but a future economic manipulation of the current set up. The possibilities of courses to obtain a degree be priced individually, based on expected earnings. Maybe.

The tier process alone forces the overwhelming majority of degrees taking longer than 4 years to obtain into the avenues of private debt, alternate private grants, personal wealth, or simply do not go. Forcing colleges and universities to reconsider what it will take to enroll someone without means to pay for the degree. Think FASFA, but applied slightly differently, ability to pay against cost of a degree based on earnings. In several other ways, the OBBB already altered FASFA math in terms of the calculations for a family’s financial need. Pell Grants, prorations, all changing.

Some numbers to consider…

As much as 48% of students obtain a loan, of some type and at some point, to obtain a 2-year undergraduate Associates Degree. The number jumps to as much as 65% for a Bachelor’s Degree, and again to as much as 68% for a Graduate Degree. This keeps going up, as much as 75% for a Doctoral Degrees. Look at this from the existing structure before OBBB impact and we should note these numbers also vary by source.

From the perspective of higher education institutions, all of them in the category of “public” sees as much as 49% of students with student loan debt. Private but non-profit sees that number jump to as much as 57%, and private for-profit sees that number jump to as much as 67%.

One conclusion, that is very safe to make, is the overwhelming majority of students out there at some point take out a student loan regardless of where they go, what degree they are chasing, or how long it takes to obtain it.

Another potential conclusion you can also make, the “we have to do something” mentality does not mean it was always the right something to do. While it is true that historically speaking higher education costs go up at a rate of roughly double inflation, what is also true is public institutions of higher education has not just closed the gap but in some cases is rising lower than inflation. Using the 30 year standard above, this is somewhat a recent phenomenon.

In this case, the behavioral changes the OBBB is likely to do here, what we do not have evidence of is institutions of higher education changing all that much. So is this really about Republicans going after certain institutions? Maybe?

A few very likely realized impacts, just a matter of time

Too easy to argue, all evidence in favor, the usual target for Republicans will take the blunt of impact. Education, Special Education, even the instructional vision and executive functions in Education.

Over 60% of all teachers out there, public schools to private and in any state in the union (does not matter how one tries to slice this up,) have a degree higher than a Bachelor’s Degree. Even if they start without a higher degree, they by majority go get one at some point. The number jumps to 66% of all Special Education teachers out there and of that roughly half have a Masters Degree. Like General Education teachers, those in Special Education usually start obtaining the next degree above Bachelor’s roughly 2 to 5 years after starting employment. And lastly, for Principles out there it is near 100%, effectively all of them, have a degree higher than a Bachelor’s Degree. With near 65% of them holding a Masters and over 15% holding a Doctorate.

Why is the argument so strong that Education takes the biggest hit? Almost 70% of all “beginning” teachers (first 10 years in) carry public student debt. Shockingly, not much private which we already know is low anyway. The number falls to about 42%, give or take, for teachers with a decade in. Late in career that number falls to about 28%, and those retired the number falls into the high teens (16% to 19%.) But think about that, they finished their career educating our kids and retire with debt, from obtaining the very degrees needed to be educators in the first place.

So, teachers in the high teen percentages have student debt at retirement but the national average for all retired people is like 6%.

What do you think this group, this important social and economic function of our nation, is going to do when OBBB completely rolls out? “Promises made, promises kept” looks to have ended up a middle finger to Education… again.

All they had to do was add Education to the special 11 degrees called “professional,” hell no, we get Theocracy. Consider the stated goals of the OBBB for education, student debt for teaching as a career, and what the profession faces overall.

This nation already has a structural teacher shortage, some say “historic,” in that roughly 1 of every 9 teaching positions nationwide (found one source saying 1 of every 8) are either currently vacant or being filled with temporary assignment by teachers who are not fully certified at the time of taking the position. Something north of 400,000 positions out there need help (one source put the numbers in the 56,000 vacant positions and 350,000 underqualified positions… give or take.)

A fun fact, with kind of a perspective on this. Bear with me. The largest sporting stadium in the world happens to be for Cricket, the Narendra Modi Stadium in Ahmedabad, India at 132,000 seats. It is a big deal over there, no judgements. But that said we have over 3 of those empty, right here in this nation today, needing new and/or properly certified teachers.

None of this means that Architecture, Engineering, even Information Technology is not important to evaluate against the OBBB. Also does not mean there is not a valid conversation to have on who may no longer go to college because of family financial position, as in which income quintile is the family of the rising student is sitting in, or alternatively may have to look at different means. Military for college benefits, other forms of financial assistance, alternative career direction with trade schools or other private training, business stepping in somehow, what have you.

Just means we are starting to see a potential and seemingly intentional target on a profession by the usual suspects.

All too easy to also argue the OBBB does not encourage the nation to make a dent in the obvious need for more teachers, more Special Education teachers, more Principles, more staff, the list goes on. The very profession, no longer called “Professional,” we entrust to handle educating downstream generations already facing plenty of challenge.

Consider all this when seeing the OBBB start to take impact, mainstream media might start talking about this again. It starts soon, and institutions themselves are also targets.

July 1, 2026 both the Accountability provisions take effect as well as the tier loan limits for students, think Fall semester this year for freshmen. What is the accountability part? In short a new “50% rule,” for widespread program failure. Meaning, more than 50% of its students enrolled in failing programs and/or more than 50% of federal aid directed at failing programs.

What is considered failing programs? A lot really, but it centers on another alteration to existing law, was called Financial Value Transparency (FVT) but is now called the Student Tuition and Transparency System (STATS.) Basically, all institutions of higher learning have to report both typical debt students incur and a valuation of specific program costs against earnings outcomes as determined by the Department of Education. Kind of already existed, but this one now has teeth.

Sometime in early 2027 the Department of Education starts handing out earnings calculations and notifications of failing institutions, by middle 2028 institutions can lose federal loan eligibility, by sometime in 2029 institutions could lose all financial aid under the 50% rules. Keep it up and the Department of Education can step in and allow for only “Teach-Out” rules, current students get to graduate or transfer but no new enrolling students.

Accountability is one thing, but so is targeting opposition.

This is looking to be another example of a Venn diagram where the circles are nearly on top of each other. Likely to get rough, and very soon.