U.S. Department of Education Issues Proposed Rule to Make Higher Education More Affordable and Simplify Student Loan Repayment

The U.S. Department of Education (the Department) today issued a Notice of Proposed Rulemaking (NPRM) aimed at reducing the cost of higher education and simplifying federal student loan repayment, as outlined in President Trump's historic Working Families Tax Cuts Act (the Act).

Last summer, Congress passed necessary changes to the federal student loan program that will drive down college tuition by equipping institutions with tools to address overborrowing, implementing commonsense loan caps for graduate education programs, and streamlining repayment options for borrowers. The NPRM is the next step in implementing these changes. The proposed rule will be open for public comment for 30 days, after which the Department will process comments and finalize the rule.

"For years, American families have rightfully been concerned about the escalating cost of higher education, the long-term-and often negative-effects of student loan debt, and how their postsecondary education translates into real-world jobs and higher wages. President Trump's Working Families Tax Cuts Act offers a once-in-a-generation opportunity to lower tuition costs and improve the student loan system to better support borrowers," said Under Secretary of Education Nicholas Kent. "With consensus reached in support of the Department's proposed rule, we have a clear path forward to fulfill the President's promise of making higher education more affordable and ensuring that every professional in America-from teachers and nurses to physicians and clergy-can pursue their careers without taking on debt they may never be able to repay."

Additional details on the NPRM:

The Act eliminates the Grad PLUS program, which allowed unlimited borrowing and contributed to rising graduate tuition, and the proposed rule introduces commonsense annual and aggregate loan caps for graduate and professional programs. Graduate student borrowing comprises a growing share of annual, aggregate federal student loan disbursements and represents the majority of the balances in income-driven repayment plans, further exacerbating the burden of student debt on borrowers and taxpayers. These new caps will compel colleges and universities to prioritize students, and incentivize institutions to reduce tuition and fees, making higher education more affordable and preventing students from being burdened with unmanageable debt after graduation.

The proposed rule also allows institutions to establish program-level loan caps below the statutory limits. These stricter borrowing limits would provide colleges and universities with the authority to set appropriate loan caps to the true cost of an academic program, helping to prevent overborrowing in programs with lower earnings or higher default rates.

To reduce complexity and improve the borrower experience, the proposed rule phases out the myriad of confusing repayment plans and introduces simplified choices for borrowers: a newly-created tiered, standard repayment plan and an income-driven repayment plan. The tiered, standard plan offers fixed terms-10, 15, 20, or 25 years-based on the loan balance, giving borrowers with higher debt lower payments and more time to repay. The new income-driven repayment plan, also known as the Repayment Assistance Plan, aligns repayment with a borrower's ability to pay while preventing low-income borrowers' loan balances from growing despite their making payments. Borrowers who make on-time payments are shielded from runaway interest and able to make steady progress toward reducing their principal.

The proposed rule also offers borrowers a second opportunity to rehabilitate a defaulted loan, helping them get back on track with repayments and removing the loan from default status. Before the passage of the Act, borrowers were only allowed a single chance at rehabilitation.

This NPRM published today in the Federal Register is the first of three planned rules by the Department to implement the historic changes to higher education made by the Act. To see the full NPRM, click here.

Public Comment Period:

Comments on the proposed rules can be submitted through the Federal eRulemaking Portal at https://www.regulations.gov. The Department will not accept comments submitted by fax or email. The Department must receive comments on or before March 2, 2026. The Department will consider and may make changes to the proposed regulations in response to substantive comments.

About the RISE Committee's Consensus:

In November, the Reimagining and Improving Student Education (RISE) negotiated rulemaking Committee reached consensus on the entire package of proposed regulations. The Committee consisted of stakeholders representing American taxpayers, the legal aid community, institutions of higher education, the business community, and students.

Beginning in July 2026, the Act limits new graduate students to $20,500 in federal student loans per year (with a $100,000 aggregate limit) and new professional students to $50,000 in federal student loans per year (with a $200,000 aggregate limit). Previously, graduate students could borrow up to the cost of attendance, which has contributed to steep increases in graduate school tuition.

The term "professional student" as used in the Department's NPRM is intended solely to distinguish programs that would be eligible for higher loan limits, as required by the Act. The designation, or lack thereof, of a program as "professional" does not reflect a value judgment by the Department regarding whether a borrower graduating from the program is considered to be a "professional." No programs previously designated as "professional" lost that designation as a result of this rulemaking. For more information, please see the Department's Myth vs. Fact sheet here.

Background:

Section 492 of the Higher Education Act (HEA) requires that the Secretary of Education solicit public involvement in the development of proposed regulations before publishing a NPRM to implement programs authorized under Title IV. After obtaining advice and recommendations from the public and stakeholders, the Secretary conducts negotiated rulemaking to develop the proposed regulations.

On July 25, 2025, the Department announced its intention to establish two negotiated rulemaking committees to prepare proposed regulations to implement the changes made to the HEA by the Act.

On November 6, 2025, the Department concluded the RISE negotiated rulemaking session after nine days of deliberation and negotiations and reached consensus on the final vote. As the Committee reached consensus, the Department was bound to publish the NPRM in the Federal Register with the agreed upon language and regulations.

For more information about the negotiated rulemaking process, see here.

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