Over 2,500 IU students could lose federal loans next year, impacting graduate programs and a nurse shortage in Indiana.
The One Big Beautiful Bill Act, enacted in July, placed new federal loan caps for graduate students and canceled Direct PLUS, more commonly known as graduate PLUS, loan programs.
Graduate PLUS loans are non-subsidized federal loans typically used to cover tuition costs that remain after other loans and aid.
In the 2023-24 fiscal year, 2,513 IU graduate students received graduate PLUS loans, borrowing a total of over $60,300,000. Additionally, 31% of IU graduate students received student loans, which include federal, private and university loans, totaling $222.5 million.
Loan changes
The act splits loan caps into two categories of students: professional and graduate. Professional students include doctors of medicine, psychology, dentistry and other health professions. Historically, professional students have been able to take out more federal loans than other graduate students. This remains the same under the new legislation.
The act expanded the professional category to include theology and law students , as well as other medical professions.
Beginning in July 2026, graduate students' lifetime borrowing will be capped at $100,000, according to a January U.S. Department of Education press release. Professional students’ borrowing will max out at $200,000. This is a decrease from previous limits of $138,500 for most graduate students and $224,000 for professional students, according to the 2025-26 Federal Aid Student Handbook.
Graduate PLUS loans were targeted by the act because they had no borrowing cap. The Department of Education hopes “to place commonsense limits on federal student loans,” with the end goal of reducing graduate school prices and overall student loans, according to a November 2025 press release.
Currently, 61% of graduate students nationwide take out federal loans, according to the Education Data Initiative. The initiative reported that doctors of medicine were most likely to have student loan debt, with 74.5% having unpaid loans from graduate school.
Effect on nursing shortage
Some medical degrees, such as a master's in nursing, are still not considered professional degrees under the new legislation.
Though a graduate degree is generally not required to become a registered nurse, the American Nurses Association said in a November statement loan caps would harm efforts to expand the nursing workforce, a field already experiencing shortages.
The Indiana Hospital Association’s Nursing Indiana Back to Health campaign projected Indiana needing 1,300 new nurses every year until 2030 to meet health care demands. According to the Bowen Center for Health Workforce Research and Policy, Indiana is operating with 72% of its needed nurse workforce.
“IHA is concerned with the proposal to lower the federal loan limits given the negative impact this policy will have on Indiana’s health care workforce, which could add to the current shortage of practitioners and result in less access to health care for Hoosier communities around the state,” Steve Cooke, IHA senior director of public relations, wrote in an email.
In spring 2025, 478 students graduated from IU with a bachelor’s in nursing, along with an additional 88 master's students. This fall, IU welcomed its largest first-year nursing undergraduate class, with 477 students.
According to estimates from IU, in-state tuition costs are $30,574 and out-of-state costs are $62,956 for an undergraduate degree. Graduate degree tuition is estimated at $44,088, but different schools have varying prices.
Impact on other graduate degree programs
IU offers a fee remission program to Student Academic Appointment holders covering costs for graduate courses. This helps to lessen the number of students relying on federal loans at IU and has been practiced for several years.
Student academic appointees include associate instructors and graduate, research and faculty assistants, who are required to work at least 15 hours per week to qualify for the program. According to a report from IU in 2022, there were 2,500 student academic appointees working at the university. This funding is not affected by the bill.
Even with the high costs associated with graduate school, students and professors still see value in it, including Benjamin Wegner, an IU doctoral student studying choral conducting who receives payment from the student academic appointments.
“When I get an opportunity to just be a student taking classes and learning new things and trying out new things, I really enjoyed that,” Wegner said. “Trying to be a full-time student and learn new things sometimes becomes more difficult when there's things I need to do for employment.”
Incoming graduate students will be affected by the bill starting July, and current students with loans will be able to continue with previous rates until graduation.
