The U.S. Department of Education has released a Notice of Proposed Rulemaking (NPRM) that aims to reduce higher education costs and simplify the federal student loan repayment process. This proposal is part of the implementation of President Trump’s Working Families Tax Cuts Act, which was passed by Congress last summer.
Under Secretary of Education Nicholas Kent stated, “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. 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.”
Key elements in the NPRM include ending the Grad PLUS program—which previously allowed unlimited borrowing for graduate students—and setting annual and aggregate caps on federal loans for graduate and professional programs. The new limits will require colleges to focus more on keeping tuition affordable and are intended to prevent students from incurring excessive debt after graduation.
Colleges will also be permitted under the proposed rule to set program-specific borrowing caps below federal limits if needed. This measure is aimed at aligning loan amounts with actual program costs, especially for fields with lower earning potential or higher default rates.
The Department proposes streamlining existing repayment plans into two options: a tiered standard plan with fixed terms based on loan balance (ranging from 10 to 25 years), and an income-driven repayment plan known as the Repayment Assistance Plan. This new income-driven plan links payments directly to a borrower’s income level while protecting low-income borrowers from growing balances if they continue making payments as required.
Additionally, borrowers would have another chance to rehabilitate defaulted loans under this proposal, instead of being limited to just one opportunity as before.
These changes were agreed upon during a nine-day session by the Reimagining and Improving Student Education (RISE) Committee—a group representing taxpayers, legal aid organizations, educational institutions, businesses, and students—which concluded negotiations in November 2025.
Starting July 2026, new graduate students will face an annual cap of $20,500 in federal loans ($100,000 total), while new professional students can borrow up to $50,000 annually ($200,000 total). Previously there were no set maximums; students could borrow up to their full cost of attendance.
Public comments on these proposals are being accepted until March 2, 2026 through www.regulations.gov. The Department will review all feedback before finalizing regulations.
