U.S. Department of Education Finalizes Landmark Rule to Lower College Costs and Simplify Student Loan Repayment

Today, the U.S. Department of Education (the Department) released a final rule that will lower the cost of college and make student loan repayment easier, an important step toward implementing historic reforms contained in President Trump's Working Families Tax Cuts Act (the Act).

Beginning this summer, the Department will implement commonsense loan limits on how much students and parents can borrow, simplify the current patchwork of repayment options, establish a new, congressionally authorized income-driven repayment plan, and enforce other protections for students, families, borrowers, and taxpayers.

The Department's final rule will carry out the Act's sweeping higher education reforms to support student borrowers and improve the health of the federal student lending system.

For decades, students and families have been undermined by the rising cost of higher education and oftentimes negative return on borrowers' educational investment. These challenges, along with the Biden Administration's mismanagement, resulted in student loan debt ballooning to nearly $1.7 trillion, with less than 40 percent of borrowers in active repayment and nearly 25 percent in default.

"The Trump Administration is focused on putting students and taxpayers first, which is why we are implementing durable policies to make higher education more affordable," said Under Secretary of Education Nicholas Kent. "President Trump's Working Families Tax Cuts Act addresses longstanding challenges in higher education and federal student lending, including exorbitant tuition costs, unchecked borrowing, and a confusing maze of repayment options that too often leave borrowers with higher balances despite making payments. This final rule will help ensure students can access higher education without racking up excessive loan debt, offer repayment options that better serve borrowers, and force institutions to reduce costs."

After decades of failed policies that have lined the pockets of colleges and universities, enabled overborrowing, and created a confusing repayment system, the need for reform is clear:

• College tuition has increased much faster than any other household expense in the last 40 years;

• Total college loans have increased 343% since 2005;

• Student loan debt now exceeds the nation's cumulative credit card debt and its cumulative auto debt;

• 71% of college graduates with student loan debt report delaying or abandoning major life milestones, such as buying a home or starting a family; and

• Graduate students hold over a third of all federal student loan debt, yet 40% of master's degree programs have a negative return on investment.

The final rule includes four key provisions:

1. Eliminates the Grad PLUS program to help curb tuition growth by ending unlimited borrowing;

1. Establishes reasonable annual and aggregate loan limits for graduate and professional students;

1. Allows institutions to establish their own programmatic loan caps that match the true value of their academic programs, preventing their students from overborrowing in programs with lower earnings or higher default rates; and

1. Simplifies student loan repayment by creating a new Tiered Standard plan and establishing a new income-driven repayment plan known as the Repayment Assistance Plan, which eliminates negative amortization.

Collectively, these changes will ensure students continue to have access to federal student loans while helping prevent borrowers from taking on unmanageable debt levels they may never be able to repay. The final rule also saves American taxpayers $409 billion by simplifying student loan repayment, eliminating excessive, illegal loan forgiveness schemes, and reducing student loan debt by $224 billion by protecting students from overborrowing.

To learn more about the final rule package, please see here.

Background:

On July 4, 2025, President Trump signed the Working Families Tax Cuts Act into law, which made much-needed changes to higher education. The Department held a public hearing on August 7, 2025, to receive public feedback on implementing the law and later convened two negotiated rulemaking committees to address the changes made by the Act.

The Reimagining and Improving Student Education (RISE) Committee met for nine days of negotiations in September, October, and November 2025. The RISE Committee included a range of affected stakeholders, including higher education institutions, student loan borrowers, and organizations representing taxpayers. The Committee addressed the student loan provisions contained in the Act and reached consensus on the final vote, including the definitions of "graduate student" and "professional student."

Following negotiated rulemaking, the Department published a Notice of Proposed Rulemaking in the Federal Register on January 30, 2026, and invited public comment. The Department received over 80,000 comments, which are summarized and addressed within the final rule.

The majority of the rule's provisions will go into effect on July 1, 2026, with provisions related to rehabilitation, deferment, and forbearances effective July 1, 2027, and the sunsetting of certain repayment plans effective July 1, 2028.

The final rule will be on public inspection in the Federal Register today and published on May 1, 2026. A copy of the regulations can be found here.