A new federal policy subjecting graduate-level teaching and education leadership degrees to lower federal borrowing caps will constrain educators’ advancement into administrative jobs such as principal and superintendent positions, a new research analysis finds.
“This has sweeping workforce implications” in education, Lennon Audrain, an assistant professor of education at Arizona State University and the author of the study, said in an interview.
Audrain, who studies educator workforce issues, recently released a working paper that analyzes the potential impact of the lower borrowing limits that educators face under the One Big Beautiful Bill Act that passed last summer and the U.S. Department of Education’s regulation implementing that provision.
The law sets new limits on how much graduate students can borrow in federal student loans. The caps are higher for those pursuing graduate degrees considered “professional” than for other graduate degrees ($50,000 annually for full-time students or $200,000 total vs. $20,500 annually or $100,000 total, with the amounts prorated depending on how many credits students are taking).
But the law didn’t specifically define “professional” degree, so the Education Department regulation implementing the loan caps, finalized in May, initially limited the definition to 11 mostly doctoral degrees, excluding education as well as a number of healthcare fields.
On June 24, a judge ruled the department didn’t have the authority to narrow the professional degree definition to the extent it did and ordered it to develop a new list. That expanded list, however, still lacks most graduate-level education degrees.
Audrain concluded that limits affecting undergraduate-level borrowing likely won’t harm those seeking to enter the teaching profession.
“For individuals entering the profession with a bachelor’s degree in education only, cumulative borrowing remains well below the aggregate cap,” says the paper.
But given that in most states, licensure for assistant principal or principal positions requires a master’s degree plus an additional 30-45 hours of graduate coursework in educational administration, the new $100,000 limit starts to become “binding,” it says.
“Professional advancement in K–12 education unfolds through stacked credentials acquired over time,” Audrain says in the paper. “No individual credential independently exceeds the statutory limit in the typical case; rather, exposure emerges from cumulative accumulation across degree stages.”
Meanwhile, even more graduate work is needed for those aspiring to become district superintendents. Some 45 percent of superintendents have Ph.D.s or educational doctorates, Audrain said. Those credentials didn’t make either the original or revised list of “professional” degrees.
The department, in responding to comments on its proposed regulation, said education does not meet the law’s test for professional degrees because, though graduate degrees may be conditions for administrative roles in some states, entry-level teaching positions only require an undergraduate degree.
Where the new rule “will start to bind and constrain is when educators start to enter administration, when they try to pursue the superintendency,” Audrain said.
The $100,000 cap “narrows the set of advancement pathways that can be fully financed through federal borrowing, and it does so more severely as prior debt rises,” the paper says.
Districts may face challenge in administrator pipeline
Audrain used the Education Department’s College Scorecard data to compute descriptive statistics, including debt-to-earnings ratios, and build policy models estimating cumulative borrowing across educator career pathways.
Education is second-to-last above nursing in a review of debt-to-earnings ratio improvement five years after degree completion in 12 fields he examined, meaning it’s one of the fields where earnings grow most slowly. (Biological sciences, mathematics, and computer science showed the best trajectory of improvement.)
“Over time, basically what we’re seeing is that educators are taking on debt to enter the field, and then their earnings aren’t necessarily catching up in their debt-to-earning ratio,” Audrain said. “Everyone else is getting better faster.”
That slow earnings growth also applies to many teachers who enter master’s degree programs in an effort to boost their earnings, he said.
Audrain said the new federal rule will have consequences for districts and their long-term staffing, especially at the administrative level.
Districts with robust tuition assistance, those that sponsor employees through doctoral programs, or those that recruit from institutions with well-funded leadership-preparation fellowships “will face less friction in their leadership pipelines than districts that lack these resources,” the paper says.
Because credentialing requirements vary across states, the uniform national cap will hit educators in some states harder than others, it says.
Over time, Audrain said, the new borrowing caps raise questions about whether schools will have a sufficiently robust pipeline of educators pursuing educational administration degrees in hopes of becoming administrators.
“Will we have the assistant principals and principals and superintendents that we need, or will that pool end up shrinking as a result of this?” he said.
