In late 2025, the Department of Education said it would no longer classify several credentials as professional degrees: education, nursing (MSN, DNP), social work (MSW, DSW), public health (MPH, DrPH), physician assistant, occupational therapy, physical therapy, audiology, speech-language pathology and counseling and therapy degrees.
President Donald Trump's July 2025 One Big Beautiful Bill Act eliminated a program that allowed graduate students to borrow up to the full cost of their attendance and placed caps on how much students could borrow. Under the new law, students in "professional degree" programs can borrow the highest amount at an annual limit of $50,000 with a lifetime cap of $200,000. Students in other graduate programs can borrow $20,500 annually, with a lifetime cap of $100,000.
One of the most immediate impacts involves student financial aid. When nursing is no longer categorized as a "professional degree," students may face stricter borrowing caps under federal loan programs. The change will impact hundreds of thousands of students—there are over 260,000 students currently enrolled in entry-level Bachelor of Science in Nursing (BSN) programs and around 42,000 enrolled in Associate Degree in Nursing (ADN), according to data collected by the American Nurses Association.
Jennifer Mensik Kennedy, president of the American Nurses Association, stated: "Nurses make up the largest segment of the healthcare workforce and the backbone of our nation's health system. At a time when healthcare in our country faces a historic nurse shortage and rising demands, limiting nurses' access to funding for graduate education threatens the very foundation of patient care."
But this controversy has sparked a deeper conversation: Could limiting student loan access actually help control college costs? This brings us to a decades-old economic theory that remains highly relevant today.
The Bennett Hypothesis has dominated debates surrounding the cost of postsecondary education for decades. The underlying premise is straightforward: when the federal government increases financial aid availability, colleges respond by raising tuition prices, effectively capturing much of that aid for themselves.
The theory uses basic economic premises: providing a cost subsidy in the form of loans or grants will increase demand for higher education. As demand increases more quickly than supply, quantity will increase but so will prices.
Over three decades of research has produced nuanced findings about the relationship between federal aid and tuition inflation. The evidence is neither uniformly supportive nor dismissive of the Bennett Hypothesis.
Results and opinions are mixed — but there's isn't definitive evidence that federal aid is driving up costs across all types of schools. Experts say there isn't solid evidence that federal aid drives up college prices, except in one sector: for-profit colleges.
Was Bennett right? Sometimes yes, and sometimes no. There is no such thing as a fixed single passthrough rate. Rather, the passthrough rate is time-varying, which helps reconcile the wide range of empirical estimates from the literature and begs for further investigation into the time-varying nature of passthrough rates.
Not all evidence supports the hypothesis. Federal Stafford loan limits did not increase from 1993 to 2007 or from 2008 to the present, yet college costs continued to increase during these periods. The maximum Federal Pell Grant remained unchanged at $2,300 from 1989-90 to 1994-95, at $4,050 from 2003-04 to 2006-07 and at $5,550 from 2010-11 to 2012-13, yet college costs continued to increase. Some of these time periods overlap, meaning that there were no increases in federal grants and loans, yet college costs continued to increase at the same pace.
At the graduate level, where students are now able to borrow from the federal government up to the total cost of their degree, research found that "in general, there were either no increases as a result, or just small increases." And at community colleges, where more than one-third of all undergraduates attend, "the amount of money that students can get in federal financial aid is already more than tuition. So [community colleges] already have that incentive to raise tuition to cover what federal aid can support, and by and large, they haven't done that."
While the Bennett Hypothesis identifies one potential contributor to rising costs, researchers emphasize that college price inflation is multifaceted.
The biggest factor in the cost of college will be decisions from state governments about funding higher education. Research shows that when states cut back funding for higher education, students pay more.
Douglas Webber finds that, since 1987, for every $1,000 decrease in state funding per student there is on average a $257 increase in college costs to students as a result of increases in tuition, increased enrollment among out-of-state or international students, and/or reductions in institutional financial aid. Moreover, Webber finds that the rate at which institutions pass on funding cuts to students has risen.
Declining real state appropriations, an increasing college wage premium, the rising cost of research activities and faculty inputs, the expansion of administrative overhead to meet government requirements and the demand for student services, and the labor-intensive nature of the university production technology are oft-cited culprits for rapidly escalating tuitions
The nursing degree reclassification in 2025 has reignited fundamental questions about how we finance higher education. While the immediate concern is access to healthcare education, the underlying debate touches on market distortions created by well-intentioned policies.
If the Bennett Hypothesis holds true, and an increase in borrowing limits increases tuition, it would logically follow that limiting the amount students can borrow would put downward pressure on tuition. However, this potential benefit must be weighed against the risk of reduced access to critical professions like nursing, teaching, and social work.
The challenge for policymakers is designing a system that controls costs without sacrificing educational access—a balance that has proven elusive for decades. As federal officials noted, the goal of the changes, including the new loan caps, is to ensure that borrowers won't face "insurmountable debt to finance degrees that do not pay off"
As the saying goes: "No good deed goes unpunished." Student loan programs began with noble intentions—expanding access to higher education—but may have inadvertently contributed to making that education less affordable. The 2025 nursing controversy forces us to confront this paradox directly.