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If you’ve heard that occupational therapy and most school psychology programs were recently moved out of the federal “professional program” category, you’re not alone in feeling confused. The wording makes it sound like something fundamental changed about professional status or licensure. That is not what happened.

What did change is how the Federal Government categorizes graduate programs for student loan purposes. The shift affects how much federal money future students can borrow, not whether occupational therapists or school psychologists are considered professionals. Still, the financial implications are real, especially for people entering the field.

This article explains what changed, how it happened, and what it means in practical terms for you, depending on where you are in your career right now.

What Changed?

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For years, many graduate students relied on the Grad PLUS loan program. Grad PLUS allowed students to borrow up to the full cost of attendance, including tuition and living expenses. That option is being eliminated.

Under the new approach, graduate borrowing is split into two categories, each with strict limits.

Graduate programs:

● $20,500 per year

● $100,000 lifetime cap

Professional programs:

● $50,000 per year

● $200,000 lifetime cap

Occupational therapy programs (and most school psychology pathways) are being placed in the graduate category rather than the higher “professional" category under the U.S. Department of Education's framework.

The “professional" list remains narrow, including fields such as medicine, dentistry, law, and, after negotiation, clinical psychology. Many licensed health and education professions are not included. The new limits will apply to new borrowers starting July 1, 2026, following legislation passed in 2025 and subsequent federal rulemaking.

How This Happened

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This was not a single decision or announcement. It unfolded in two stages.

First, Congress passed legislation - commonly referred to as the One Big Beautiful Bill Act (H.R. 1) - that eliminated the Grad PLUS loan program and required the Department of Education to redesign how graduate borrowing works. Once Grad

PLUS was removed, federal regulators had to create a system with borrowing caps. That made categorization unavoidable.

Second, the Department of Education conducted a negotiated rulemaking process through the RISE committee. Negotiated rulemaking brings together stakeholders to shape regulatory language.

During this process, the Department of Education defined which programs would qualify as “professional” for loan-limit purposes. The definition relied heavily on older federal degree lists and stayed narrow. As a result, many modern licensed professions, including occupational therapy, were excluded. This is why the change feels sudden, even though it moved through formal channels over time.

Implications If You’re Entering OT or School Psychology

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The most immediate effect is straightforward: future students will have access to less federal money upfront.

Many OT programs and many school psychology tracks exceed $100,000 in total cost, including tuition, fees, and living expenses. Without Grad PLUS, students who hit the federal borrowing cap will need other ways to cover the difference.

That typically means one or more of the following:

● Private student loans, which often have higher interest rates and fewer protections

● A co-signer, which is not always an option

● Working more hours during training, which is difficult in clinically intensive programs

● Delaying enrollment or spreading coursework over more years

Professional organizations have warned that this could shrink the pipeline into OT and school psychology, particularly in regions that already struggle to recruit students.

Why Does This Increase Financial Risk for Students?

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Federal loans come with protections that private loans usually do not. Standardized repayment plans, hardship options, and forgiveness pathways reduce long-term risk.

When students are pushed toward private lending to bridge gaps:

● Interest rates may be higher or variable

● Repayment terms are less flexible

● Protection for periods of financial hardship is limited

● Forgiveness options are rare

This does not affect everyone equally. The risk is concentrated on new master’s and doctoral students who are deciding whether graduate training is a financially viable pathway.

What The Change Means For Schools and K–12 Services

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Pipeline changes do not stop at universities: they reach schools, too. If fewer students can afford OT or school psychology training, districts may experience:

● Longer hiring timelines

● Higher caseloads for existing staff

● Increased reliance on contracted services

● Less continuity in services tied to IEPs and intervention plans

These pressures arrive at a time when many districts are already navigating staffing shortages and increasingly complex student needs.

Does This Affect People Working as OTs or School Psychs Right Now?

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In most cases, no, not directly. These changes are about student loan borrowing rules, not licensure, scope of practice, or professional standing. People already in the field are not being reclassified, and existing borrowers are generally expected to be grandfathered under current lending rules.

However, there can be indirect effects:

● Supervisors and faculty may see more financial stress among students

● Programs may face enrollment pressure

● Districts with hiring challenges may feel the impact as cohorts shrink

Those effects will likely unfold gradually rather than immediately.

Why Wording Caused Confusion

The phrase “professional program” is doing too much work. In federal loan policy, it is simply a borrowing category. It is not a judgment about whether a field is a profession. Inside Higher Ed summarized the issue clearly: exclusion from a loan bucket is not the same as losing professional status, but the distinction has not been communicated well. The concern is understandable. The terminology is misleading, and the financial consequences are real.

What Clinicians, Educators, and Programs Can Do Now

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There is no single fix, but there are practical steps to help reduce confusion and risk:

● Be clear with prospective students

Explain that the issue is borrowing limits and the loss of Grad PLUS, not licensure or professional recognition.

● Push for cost transparency

Programs should publish realistic total cost estimates and likely borrowing scenarios.

● Stay informed through national organizations

Groups like AOTA, NASP and NBCOT are actively engaged and provide the most accurate updates.

● Help students plan early

Scholarships, assistantships, employer tuition support, and careful loan comparisons matter more than ever.

The Bottom Line

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This federal change does not redefine occupational therapists or school psychologists. It does, however, change how future students pay for training, with ripple effects for programs, districts, and service delivery.

Understanding what actually happened, and what it does and does not mean, helps keep the conversation grounded. The policy is about loan limits, not

professional value. But the consequences will be felt in very real ways by the next generation entering the field.

Tags: Professional program change, student loans, graduate loans, occupational therapists, school psychologists

OTs & School Psychs: What the Federal “Professional Program” Change Really Means For Your Career