Department of Education’s Interim Guidance Protects Taxpayers

College tuition has skyrocketed, and taxpayers have paid the price. In fact, taxpayers spend roughly $40 billion per year on subsidized federal student loan programs, and that’s just the tip of the fiscal iceberg. Fortunately, under the leadership of Department of Education (ED) Secretary Linda McMahon, the ED is doing everything in its power to keep costs low for taxpayers. Case in point: the ED’s interim guidance updating the list of degree programs deemed “professional”—and therefore eligible for higher federal loan caps—in response to a district court’s preliminary injunction in the case American Association of Nurse Practitioners et al. v. McMahon. As the Taxpayers Protection Alliance noted in a recent letter to the ED, this interim guidance protects taxpayers and ensures continued accountability in the higher education sector.

Ideally, the court would have permitted the ED to maintain its strictly tailored borrowing caps for federal student loans. Uncapped or elevated borrowing ceilings (even for advanced degrees) distort the market, disincentivize university cost containment, and ultimately shift high-risk debt burdens onto taxpayers.

Following the district court’s order, maintaining the original 11-degree list was clearly no longer a viable administrative option. Faced with this constraint, the ED took the second-best path forward: reluctantly expanding the “professional” designation under a temporary stay but structuring that expansion in a manner clearly designed to minimize taxpayer exposure and repayment risk as much as possible.

The ED deserves praise for taking the following fiscally prudent steps within its interim guidance:

• Explicitly Urging Institutional Restraint: ED’s recommendation encouraging colleges and universities to voluntarily limit student borrowing to the general graduate cap ($20,500/year) for newly added programs during the pendency of litigation is a sound policy safeguard. It sends a clear message to higher education administrators not to artificially inflate program costs or over-leverage students based on a temporary legal stay.
• Generally Excluding Academic Doctorates: Drawing a relatively firm line against expanding the $50,000 professional cap to research and academic doctorates (such as PhDs in nursing or health sciences) correctly protects the integrity of the statutory cap structure. Research-based academic programs should not be conflated with direct clinical or professional practice credentials to access higher federal debt allowances. The latter credentials promise higher rates of return and therefore entail less of a repayment risk for taxpayers.
• Aggressive Application of Statutory Criteria: By dropping ancillary programs (such as applied psychology and pharmaceutical administration) that fail the strict statutory three-part test down to the $20,500 limit, the Department demonstrated a commitment to holding the line against federal loan expansion wherever legally permissible.

While any expansion of the list of “professional” degrees still entails long-term fiscal risks, the ED’s response to the preliminary injunction will best protect taxpayers given the significant constraints imposed by the court’s order.

Ultimately, the ED and the Department of Justice must vigorously defend the Reimagining and Improving Student Education (RISE) final rule in ongoing appellate proceedings. The goal must remain a streamlined and constrained federal lending framework that protects the American taxpayer from subsidizing high-risk graduate debt.