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Accounting Associations Take Issue with New Federal Loan Caps

By Contributor
Accounting and Tax Planning

What’s in a Classification?

 

The National Assoc. of State Boards of Accountancy recently came out in opposition of the U.S. Department of Education’s implementation of new student loan policies that reclassify accounting degrees as ‘non-professional.’

“Classifying accountants as anything other than professionals fundamentally misrepresents the critical work CPAs perform, work that is responsible for the integrity of the global financial systems on which businesses and individuals rely,” NASBA President and CEO Daniel Dustin said. “There’s a reason certified public accountancy has been a licensed profession in the United
States since 1896.”

The Department of Education change affects federal loan caps under the new Repayment Assistance Plan (RAP) that, beginning in July 2026, will reduce borrowing limits for accounting students to $20,500 per year, compared to $50,000 per year for degrees the department now labels ‘professional.’

NASBA argues that a reduction in loan access may deter a broad range of students from entering the CPA profession at a time when the complexity of markets and businesses require a robust and educated workforce. The association maintains that federal policy must accurately reflect the realities of professional CPA licensure, as economic stability and protection of the public depend on a strong and well-regulated accounting profession.

This reclassification also excludes many other long-recognized licensed professions, including those responsible for public health and safety, such as nursing, architecture, education, and engineering.

According to the U.S. Department of Education, the new loan limits that result from these reclassifications will help drive down the cost of graduate programs and reduce the debt students have to take out. Graduate students received more than half of all new federal student loans originated in recent years, and graduate student loans now make up half of the outstanding $1.7 trillion federal student loan portfolio.

Among the professions that still retain their ‘professional’ designation for higher graduate school borrowing limits are medicine (MD), dentistry (DDS/DMD), law (LLB/JD), and several others. Undergraduate students are generally not affected by the new lending limits.

NASBA plans to consult with the 55 U.S. accounting jurisdictions it represents — which license more than 653,000 CPAs in the U.S. — and will engage policymakers to ensure accounting is restored to the professional degree category.

Other organizations have publicly opposed the reclassification as well. The National Assoc. of Tax Professionals is also urging the Department of Education to reconsider the change. In a statement, the NATP argued against the non-professional classification on four grounds.

1. The reduced federal borrowing levels will make accounting education less financially accessible. This could deter students from entering the field, especially first-generation college students, students from rural or underserved communities, adults seeking a career change, working students completing degrees part-time, and anyone needing graduate-level coursework to advance.

For a profession that already requires rigorous education and often additional coursework for licensure, lowering loan access could make a critical career path harder to pursue.

2. Accounting is a professional field, and the reclassification doesn’t reflect that. Accounting is a licensed, regulated, ethics-based profession with real-world public responsibility. Tax professionals and accountants complete extensive coursework, uphold ethical and legal standards, maintain continuing education, help taxpayers navigate complex federal and state laws, and protect the integrity of the tax system.

Reclassifying these degrees as non-professional does not align with real-world requirements or the public-facing nature of this work.

3. The tax-professional workforce is already stretched thin. More than 80 million taxpayers rely on paid preparers each year. Many small businesses, elderly taxpayers, rural communities, and underserved populations depend on credentialed professionals to prepare accurate returns and resolve IRS issues.

But the tax workforce is aging, and firms across the country report difficulty recruiting new talent — a trend NATP members have voiced repeatedly. Limiting access to accounting education risks shrinking the talent pipeline, increasing filing errors, lengthening IRS response backlogs, reducing availability of professional help in underserved areas, and exacerbating seasonal workforce shortages. This isn’t just an academic concern, but a practical one with direct consequences for taxpayer service.

4. Taxpayer service and compliance could suffer. The federal tax code is becoming more complex each year. New credits, expanded eligibility rules, increased digital reporting requirements, and shifting IRS processes all increase the need for well-trained professionals.

If fewer students can afford to pursue accounting degrees, taxpayers could experience longer wait times for appointments, reduced access to qualified preparers, higher risk of filing mistakes, greater reliance on unregulated or untrained preparers, and increased compliance challenges.

Mistakes in Classifying Your Workers Can Be Costly

By Contributor
Banking and Financial Services

Contractor or Employee?

By Sarah Rose Stack

 

Even prior to the pandemic, the ‘gig economy’ was growing at unprecedented rates. That growth has only been accelerated with more traditional companies relying on remote workers and hiring more contractor workers. Freelancing is big business, with nearly $1 trillion of income generated. However, although that total number is impressive, independent contractors earn 58% less than full-time employees (FTEs), and more than half don’t have any employer-provided benefits.

From a business perspective, there are advantages and disadvantages to how a company classifies its workers. With employees, you’ll have more control, but that comes with more compliance obligations. With contractors, you’ll have fewer compliance obligations, but you will also have less control.

“From a business perspective, there are advantages and disadvantages to how a company classifies its workers.”

Some tax advantages to hiring independent contractors include the ability to avoid several tax obligations that apply to employees. For example, a company generally isn’t required to withhold federal or state income taxes, pay the employer’s share of Social Security and Medicare (FICA) taxes, withhold the workers’ share of FICA taxes, or pay federal or state unemployment taxes.

In addition, companies that use contractors may avoid other obligations, such as the requirement to pay minimum wages and overtime under the federal Fair Labor Standards Act and similar state laws, furnish workers’-compensation insurance (in many states), make state disability-insurance contributions, or provide employee benefits.

Keep in mind that simply having a written agreement or labeling a worker as an independent contractor doesn’t make them so. The IRS and other government agencies look at all the facts and circumstances to determine whether workers are misclassified.

When someone is hired, they must be classified as either an employee or an independent contractor. Here’s how the IRS determines worker status.

 

Behavioral Control

If the company has a great deal of control over the behavior of the worker — for example, where they work, when they work, or how they perform their jobs — the worker should be classified as an employee. If the company is giving the worker evaluations, conducting extensive or ongoing training about procedures and methods, or demanding that the worker attend daily meetings or set hours, then the worker is more likely an employee. Independent contractors will customarily set their own hours, decide on how to implement a project, and dictate where they work.

 

Financial Control

If a company provides equipment for the worker (tools, software, computers, phone, etc.), often reimburses expenses, and/or pays on regular and ongoing basis, then the worker is more likely to be an employee. The IRS clarifies by considering the following:

• Significant investment in the equipment the worker uses in working for someone else;

• Unreimbursed expenses, which independent contractors are more likely to incur than employees;

• Opportunity for profit or loss, which is often an indicator of an independent contractor;

• Services available to the market, as independent contractors are generally free to seek out business opportunities; and

• Method of payment. An employee is generally guaranteed a regular wage amount for an hourly, weekly, or other period of time even when supplemented by a commission, while independent contractors are most often paid for the job by a flat fee.

 

Relationship

Perception of the relationship is considered, but the interactions between workers and employees is what ultimately defines the relationship. Written contracts are considered; however, an employer cannot classify their workers as independent contractors when they, in fact, treat them like employees. If the company is providing employee benefits, insurance, paid time off, sick days, or pension plans, then the worker is most likely an employee.

Another area to consider is the permanency of the relationship. Employees are more likely to be hired indefinitely, and either party can terminate the relationship at any time, for any legal reason. Independent contractors’ rights are subject to a contract.

 

Penalties for Misclassifying Workers

The consequences for misclassifying employees as independent contractors can include IRS penalties and other non-tax implications. The IRS may assess back taxes against the company and demand that the company pay the employees’ share of unpaid payroll and income taxes, regardless of whether or not the independent contractors met those tax obligations. Companies can also expect to pay IRS penalties and interest. Further, workers can file a lawsuit against employers to demand back pay, overtime, and benefits.

 

Review Your Current Workers’ Status and Hiring Policies

The potential tax and non-tax savings do not outweigh the significant cost of misclassifying workers. It’s important to review your hiring policies, even if you are comfortable with your classification of current workers, to ensure that you are meeting all applicable standards for classification. Talk with your advisors if you believe you may have misclassified an employee or have questions about the standards.

 

Sarah Rose Stack is the Marketing manager for Holyoke-based accounting firm Meyers Brothers Kalicka, P.C.